Goal-Based Investing: The Foundation for Advisor-Client Relationships

by Benjamin Beck, CFP® Benjamin Beck, CFP® | February 15, 2024

What I want to talk about today is what we call the GPS here at Beck Bode. GPS stands for Goals Planning Statement, and it’s our objective to make it the foundation for the relationship we build with all our clients. I may need to remind you: we got our start in the business on the wealth management side; using financial planning as a basis for our work was the evolution of our work, it was not how we started doing things initially.

Creating a GPS for every single client is something we are dedicated to accomplishing across our entire client platform today. This means going back through our database of clients and ensuring that we know exactly what their life goals are for those clients for whom this was simply not part of their onboarding process. But also, for those clients where we are quite familiar with their most cherished goals, we always want to go back and find out, are those goals still the things they dream about, or have their aspirations changed in any way, and how?


The Importance of Goal-Based Investing 

It’s interesting, because occasionally (and not infrequently), when we bring up the topic of talking about goals with new or even existing clients, they may be puzzled by the question. You know how it is, you hit it off with someone, it seems like we are a good fit for each other, and they are clear that they want to invest money. Sometimes, they ask, “Why do we have to go through this process, just take my money and invest it!” 

Sometimes, you, the advisor, may be wondering the same thing. Wouldn’t it be good enough to take this willing client, and simply do what they ask for, is it necessary to get into the whole financial planning conversation with these folks?

The short answer is yes. At Beck Bode we find it is absolutely necessary to go through the GPS process with everyone. Because a portfolio without a plan is just a portfolio dangling out there in the universe, with no real foundation or direction regarding “what the hell are we doing this for?” When there is no reason behind the portfolio other than to make money, it introduces potential obstacles later in time. For one, it’s easier to abandon an investment strategy that lacks a real purpose behind it. It’s harder to stick with a portfolio during volatile market conditions without a reminder of the bigger purpose behind it.


Real Client Scenarios: Navigating Resistance to Goal-Centric Portfolios

Today, I want to speak with you about real client situations, where we (myself included) have run into some resistance from the client in getting the information we need to put together a GPS

There was a young couple, two working professionals with a growing family, who happened to sit in a Discovery session with one of our team members. Initially, the advisor chose to take them down the road of asking, (I’m paraphrasing here…) “So, what are your goals? What is this money for?” The couple’s response to this question was pretty flat, which is not that uncommon, especially with folks who are younger. The husband and wife weren’t quite 40 years old; they have two young kids, and a couple hundred thousand dollars that they have saved in various accounts. They were coming to us because they wanted guidance on how to invest the money. Probing further, the advisor continued to receive more of the same. All the prospective client could say in response to the advisor’s question was, “Well, we just want to be invested; we know this money needs to be working for us. There isn’t much more to it.”

This of course, is an understandable answer. If this is a family that’s just getting started, chances are they haven’t even thought about retirement yet. The first thing you want to do is to acknowledge everything they are saying. And you definitely do not want to say to them, “Well, part of our process is a GPS, and what we do is collect this information from you so that we can write it up and use it for the foundation of our planning process, followed by “So, how much money do you need to live on?” Because if this client can’t answer the question of what their goals are, they are not likely to respond to a process that is just going to ask them more questions like this.


Setting Financial Goals Through Conversation

The team member asked me how I would handle the situation. Here is my take on it, and I am not saying this is how you should say it, these are my words. I would acknowledge that, “You know, retirement is so far off in the distance, that perhaps it’s not even a thought right now.” Follow up with a question, “But if you could retire anytime without considering all your other obligations, simply given your personal preference, when would it be?” For many people, the answer may be tomorrow! “But realistically, as we picture the children getting older, when do you see yourself retiring?” Again, you may get an “Oh, I don’t know.” The key is to stay in the conversation and see where it leads you. Let the client talk about what they imagine their kids may do when they are older, what they think they may be doing when they are older. You will eventually get to an age range, which you can use as your starting assumption. Once you know how much money they make and spend today, you can back into a ballpark figure for how much they need to be investing to get there.

Ironically, the exact scenario that the team member was asking me about happened to me just one day after that conversation. I was speaking with a new client, who’s 45 or 47, and a little on the brash side. He said, “Ben, look, I work in the financial field; I do a really good job and I make good money.” He continued, “I’ve heard good things about you and your group from so-and-so. I just want you to make me as much money as you possibly can. You do your job, I do my job and everything works out.”

I laughed and said, “I appreciate the straightforwardness of all this.” In the back of my mind was that I needed to get a “why?” statement from him, so that could be the foundation for our work. When I asked him about his goals, his comeback was, “Oh, I don’t want to spend more time on this and slow us down. I just wanna get this done and over with.” He didn’t want to answer my question.

I said, “You know, retirement might be so far off in the future there, and you have so much on your mind right now.” I happened to know that he had been through a divorce recently and I also knew he had a demanding job. “Given a preference though, how long do you want to be living the way you are now… are you the type of person that wants to work forever?” He said nothing. “Do you see yourself ever retiring?” I asked. Again, he didn’t say much. I said, “Well, how much money are you making today?” This is about as basic as it gets. He told me how much, and it was a  substantial income. “Let’s say hypothetically we were able to grow your portfolio reasonably, plus your added contributions, to a point in time where you may be able to live comfortably; at that point, would you still want to work, or would you stop?”  I asked.

Like a waterfall, suddenly his goals and objectives started flowing. “Hell no,” he said. “I love to fish, I love to be on the road with my boys, to take them fishing and travel with them.” He continued, “I'm not like my siblings that are going to work till they die. You know, once I have enough money to retire, I want to go fishing every day. I don't want to be working 18-hour days.”

I acknowledged what he said and shared with him that I could imagine that for me, too. “I have four kids myself and having the freedom and independence to do the things I want to do with them is hugely important to me. I'm not saying that you're saying that your work is a burden, but it's certainly something, certainly as you get older you may not want to do it with the same intensity,” He interrupted me, “No, Ben, it is a burden. Work is a burden. I make good money right now, and I want to be able to get to a point where I can completely move away from it and enjoy my life.”

That’s the direction the conversation took, and we continued to chat for some time where he shared even more with me. Without mentioning the GPS, I was able to collect all and more of the information I needed to map out a solid GPS for this client.

I could have easily (as we have in the past) taken what he said at face value; he was referred by somebody else, he was ready and willing to transfer his money in, he knows about the investment strategies and case closed, right? We could have just taken his money and invested it for him, right?

No. Because when a person comes to us like this, and we don’t make the time and effort to take them through the GPS conversation, at the end of the day, we’re not gaining a relationship, that's not a client, that's a customer. And we want to stay away from customers.


How A Financial Planning Approach Improves Advisor-Client Relationships

Let me repeat this: we don't want customers. We need to have bigger conversations with folks. We need to have these GPS conversations. Perhaps it's a prospective client who’s giving you pushback, or maybe the pushback is coming from you – the relationship manager or the advisor. Don’t hesitate to ask the important questions about their life goals. If you are an advisor you need to develop the skills to dig a little bit deeper in a non-threatening manner and to get those answers out of folks, because these hard questions are the ones with the potential to impact a client’s future in a significant way. They will thank you for it.


Ben Beck is Managing Partner & Chief Investment Officer at Beck Bode, a deliberately different wealth management firm with a unique view on investing, business and life.

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