Beyond the Numbers: Understanding Your Client’s Story


Behind the Numbers

One important aspect of taking a good fact finder is to gather key pieces of data from your prospect. Without an understanding of their current income, assets and liabilities, you can’t help them to formulate a plan to achieve their financial objectives and protect their family from the unexpected.

In my 27+ years of working with advisors, I have found that many fall into the habit of simply writing down these numbers – but they don’t take the time to understand the importance of the story behind them. To me, it’s like the difference between a snapshot and a movie. A snapshot is just a moment in time – but a movie tells you the whole story.

Consider that two clients could be in identical financial situations, but have arrived there as a result of dramatically different circumstances, decisions and behaviors. For example, take a 30-year-old client who has $50,000 in his savings account.

In one situation, a client was frustrated by overspending in his early twenties. He committed to saving $1,000 per month for the past four years, and has accumulated $50,000. Here is someone who has successfully made a major life change for the better. He is now a saver and sticks to the plan.

Compare this to a client who inherited $200,000 from his grandfather two years ago, but blew most of it on lavish trips and gambling. He’s down to $50,000 and is depleting his resources at a rapid pace.

Same number. Very different stories.

Financial security is a journey of 20, 25 or even 30+ years. It’s our job to help our clients make it to the Promised Land. This means that, in the long run, the number in a client’s savings account today is far less important than the story behind it.

The key is to ask questions, listen and continue to follow up until you have the movie – not just a snapshot.

The Net-Net

Another opportunity for you to dig deeper in your fact finding is with your client’s salary. A salary is not that significant by itself. Again, it’s just a number.

In the long run, the number in a client’s savings account today is far less important than the story behind it.

Monthly net cash flow is far more important than gross salary. So, start with the amount that gets deposited in their checking account after taxes and health insurance.

Then, ask how much is spent on the mortgage or rent, as well as discretionary and non-discretionary expenses. Factor in their debts and you’ll quickly be able to calculate how much they have left to save and invest.

One recent article highlighted the finances of a couple with an annual household income of $500,000. Similar to their story, some of your clients with an expensive lifestyle may feel as if they are just “scraping by,” even with a high income.

Your job is to ask the right questions to help them understand their reality and determine what that means based on their financial goals.

Looking Beyond the Past and the Present

Past behavior can give you great insight into your client’s current circumstance. However, it’s also important that you explore any foreseeable changes in your client’s future.

Are your clients in a long-term relationship? Planning on getting married? Or, are they married but in the process of a divorce?

Do they want to have children or additional children?

Are their children approaching college? If so, do they want to go to college? Or, are they nearing college graduation?

Do your clients love their jobs and plan on working part-time once in retirement?

Or, do they hate their jobs and can’t wait to cut back on hours, retire as early as possible or switch careers at some point?

Are their parents still alive? Are they in good health? What sort of relationship do they have with them? How about their spouse’s parents?

At the end of the day, it’s about having an authentic desire to understand your client’s story. For clients who have major life changes on the horizon, ask follow up questions to better understand how these changes could impact their financial planning.

A simple start would be:

Tell me how you think that might impact your planning?

And then be quiet and just listen.

You’re in an Emotional Business

Logically, every client knows they need to save more. But why haven’t they been able to do that to this point? What’s getting in the way?

Understanding the story behind your clients’ current financial situation and helping them connect emotionally to their goals is how you’ll help them get where they want to go.

So, make sure you dig deep in your next client meeting. Seeing the movie vs. the snapshot is the key to doing what’s right for the client – and it’s what’s needed to take your practice to the next level.

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