Financial Planning

Advisor-Client Chemistry

Do you have the right clients? This is a very topical issue for many financial planners, particularly those who have already built a business to a reasonable level. Actually, it is as important as the client selecting the right advisor.

In the end there must be a mutual relationship with the parties comfortable with each other. The relationship cannot start out (but it often does) with the client simply having dollars in the bank account and some financial planning needs, and on the other side the client believing the advisor has the skills and the necessary integrity. In fact, these are all assumed to get to the point of the first meeting. Bob Veres of Inside Information ( has written a great article this month called “Segmentation or Bust” mainly directed at advisors to consider the structure of their client base.

Our business is all about looking at the behavioral style of the clients and also the advisors. So, not unexpectedly, the approach we take is to match clients and advisors based on their behavioral style. This is very much an inside-out approach, however all great relationships start below the surface. Human behavior is at the core. The great thing is that the Financial DNA system measures natural behavior which means we can reliably predict the behavioral style of the advisor and client in terms of how that person will always be, particularly under pressure. I would say that our approach must still be blended with a number of other more traditional selection factors such as client size, service style, values, expertise, etc. that are mentioned in Bob’s article.

To help the advisor we have developed an Advisor/Client Compatibility Matrix. The matrix is a one page grid which matches profile styles based on the level of modification that will be required between advisor and client. To be clear, it does not say you cannot work with someone, but it does say who will be easier (green box on the matrix) based on less behavioral modification – this is where communication, chemistry, etc. is likely to be higher. Hence, this is where the relationship will be naturally more sustainable over a longer period with less stress. So if you are an advisor wanting to segment your client base a reliable starting point is now provided.

I do not necessarily advocate that you fire those clients who will require more behavioral modification (red box on the matrix). This will be a warning sign that you have to put more work into adapting to maintain the relationship. Although what you may wish to do is allocate these clients to a partner who is different to you or hire someone who is different to you to provide a complementary style. Many advisors have found this approach to be foundational for selecting their next hire. Or in how they deliver client service with a team-based approach. Hence, the planner may get the relationship started and then another person on the team steps in.

Are you interested in the value of your practice? Importantly for advisors, this approach also helps you to identify to whom you sell your business. The sustainability of the relationships and hence the revenue is critical to business value.

The Definition of Retirement is Changing

What is your definition of retirement? It might be good to think about that a bit. Do not just listen to the “noise” out there about what it means or what others are doing. Focus on you and who you are. You may just be surprised what retirement really means in the context of your life. The key point is that the definition of retirement will depend on your unique financial personality – how you are uniquely wired to make life and financial decisions. In effect, your financial personality will shape how you see life and deal with the retirement question. Whatever stage of your career or life you are at, addressing this question will be very liberating.

In recent times we have started to do a lot more work with the executives of corporations. In particular, we are delivering Quality Life Programs to executives participating in 401k plans. An interesting trend emerging is more and more executives are starting to realize that retirement does not necessarily mean they have to stop work. The point is, the definition of retirement is changing. A friend of mine who is a senior executive with a large fund manager providing retirement services and products to executives, said he is seeing the same trend of people including work in their definition of retirement. In fact, the discussion that their company has with executives is now becoming much more focused on getting each person to define what retirement means for them. Our focus is similar, bundling the question of retirement up with what is a “Quality Life” for you, again recognizing that this is different for everyone.

Another person recently said to me that their definition of retirement is “Doing what you want, when you want and with whom you want”. I thought that was a great one and truly resonated. How much freedom can you get from this type of thinking? Frankly, it is a lot. The person who said this was actually still working, the point being he is now in a role he loves to do every day. When you get this pinpointed it is amazing how you then find yourself around the people you enjoy being with, and managing your working schedule becomes easier. Again, the key is getting centered on who you are by addressing the retirement question from the inside out.

Even if you are a long way from the traditional retiring age of 60 or more, you can still address the question because the answer will shape a lot of career and life choices and hence your financial planning.