Benjamin Beck, CFP®I like the analogy that is occasionally used in our industry, which finds parallels in the relationship between doctor and patient, and advisor and client. And while I am not at all suggesting that we are doctors, the nature of the interaction between doctor and patient does mirror the way that we interact with clients in our work.
What comes to mind is a very nice couple who was introduced to me by a good client. Like most people who come by introduction, they arrived to sit with me for their first meeting — the one we call ‘Discovery.’
Just consider the fact that this husband and wife took the time to come and sit with me — clearly the topic was and is important to them. Is my assumption incorrect that anyone who is sitting across that table does not need help? Even without knowing them, my answer is they will need our help.In my personal and professional experience, anyone who comes through our doors can use our help.
I also firmly believe that the folks who do come to sit down and talk with us about their finances (or meet us on Zoom) are all afflicted with the same ailment. And that ailment is their human nature, it’s their emotionality. The fact of the matter is that without our help (or the guidance of someone who can buffer them from their emotionality), we can be certain that they are already failed investors.
3 Steps of a Financial Advisor’s Diagnostic Process
Gathering Client Information
If we use the doctor analogy for the purpose of this conversation, as a financial advisor I must gather some information about my prospective client, much like a doctor would get a sense for their symptoms, their pain, and their needs.
I do a similar thing: I ask questions.
I unearth people’s most important long-term goals, their most cherished wishes. As they reveal this information to me, I begin to sketch out a plan. That plan will ultimately answer many questions, the most important one being: What will their capital need be to accomplish their goals? Are they at risk of outliving their capital over time?
Translating Financial Vital Signs into the GPS
Having taken their financial vital signs, I’ve also listened carefully to how they are feeling, and where they are headed. I have come to a conclusion, which I have captured in the form of a goals planning statement, better known as the “GPS” here at Beck Bode.
This GPS is the foundation of a plan for the lives of our clients. For many of them, it is, in fact, a multi-generational outline as a lot of folks will have their money outlive them and want to ensure they can impact future generations.
Prescribing Portfolios that Fulfill Client Goals
Now that we have a plan, I suggest a portfolio that’s aligned with that plan.
In all our blogs, newsletters, and client interactions at Beck Bode, we cannot overstate this statement: “We start with goals and objectives, then create a plan, and then and only then, do we fund the plan with a portfolio of companies that are optimal in realizing the plan.”
So that is what we do.
I must admit to you that taking this step-by-step approach has been very difficult for me to do; only through years of practice have I been able to suppress my desire to get to work immediately.
My impulse is to jump into action, to know exactly all the things I can do for this client, and I want to get going, today. Right now. I've listed the symptoms, I've put together a plan, I've recommended a portfolio of securities. Let's go, let's do this, is what it feels like to me inside, but I have to pull myself back. The curtain goes up on everything that I presented. I only have one question: “How are you feeling about all this?”
The Importance of a Step-by-Step Approach
First, if my diagnosis is correct, the plan that I’ve prescribed based on their goals and objectives is correct , and the portfolio I’ve recommended of owning a wonderfully diverse set of some of the top companies in the world is indeed optimal for them to achieve that plan, then I also know two other things:
I know that here is a perfectly logical and compelling answer to any question that a potential client can ask from that point forward. I love sitting across the table from someone and fielding these questions, not in an arrogant manner, but knowing that if I've listed the symptoms, made the diagnosis, put together a plan, recommended the optimal portfolio, and I know all those are correct, then there's no question that they can ask that doesn’t have a perfectly logical answer. I know I will be able to answer any question they bring.
I also know that there are no logically valid objections. If the diagnosis is right, the plan is right, and the portfolio is optimized; there are no valid objections.
This is why I love the doctor analogy so much. When a prospective client sits t down with me, and we've gone through multiple meetings where I’ve explored their situation, gathered all their information, produced a plan and a proposal of securities to optimally achieve that plan. What’s my obligation at this point?, I ask myself.
Just like a doctor, my obligation has ended after the prescription has been delivered. I say this not to be a “wise guy.” I say this because I have arrived at this conclusion as part of my evolution as an advisor.
I’m not saying the conversation with this prospective client has ended. I am saying that my obligation has ended. I have prescribed the medicine. If they have questions about the recommendation, if they need context or clarity around anything that we've talked about, of course I will discuss it with them. But I am not bending my recommendations in any way, much like a doctor would not change their prescription after the visit.
Unless there's something that comes to light that they did not share with me and that was material, I would not change my recommendations. But outside of such an extreme example, my duty to these folks has ceased.
Respecting Client Choice in Financial Planning
What I mean is that I am not selling anything at this point. In fact, I’m not selling throughout any of this. I am going through the same process that a good doctor would take with a patient. He or she would take the patient through a similar process and prescribe the optimal treatment. Whether or not the patient accepts to engage in the treatment is not the doctor’s obligation.
I say this because there are people in our industry, who may feel the need to repeat and defend their recommendations over and over again until the people across the table roll over and become a client. That’s now how we operate at Beck Bode. We do not convince anyone to become a client. We present the facts, and let them ultimately choose what’s right for them.
Not selling, not pushing, not convincing…this is a skill that one can learn. As a financial advisor, I have learned that it is a skill to be able to let go of wanting to make the client see it your way. Many financial advisors are passionate about what they believe in — I know I certainly am. But I know that I don’t need to force the client into taking the medicine. I rely on what I know, on the fact that I have done my duty. I have listened and advised them to the best of my knowledge and have presented them with a prescription that will indeed work, if taken as prescribed.
Everything else is up to the client.
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.