The Framing of a Purpose-Centered Alliance
After the foundation is poured, a master builder is ready for the carpenters to come to the site and erect the frame of the house. As the two-by-fours and two-by-eights are measured, cut, and put in place, the house takes shape rapidly. The excited homeowners can see the dimensions of each room, and they can visualize how the rooms will look when it is completed. But more work needs to be done.
The second meeting with clients is much like the framing phase in building a house. Elements of the financial strategy start to take shape, but we have to be patient and not rush to finish the job. Make sure your clients know this meeting is essential to be sure the final strategy accomplishes all their goals and fulfills all their dreams, but that you won’t be making the presentation at this second meeting. The goals of this meeting will be information, education, and clarification.
The principles that applied to the clients setting financial goals also apply to those of us who design financial strategies. To complete the financial strategy, I need to obtain all the necessary information. Each element of the clients’ financial strategy will be designed according to these SMART goals:
- Specific solutions;
- Measures that define financial positions now and at points in the future;
- Agreement to move forward;
- Risk tolerance (using the company-approved risk tolerance tool); and the
- Time horizon for each goal.
These goals in your presentation require a high standard and may require rigorous honesty. For example, one gentleman told me he wanted to retire at sixty-five with $1 million in investments. That would be fine, except for one thing: He was already sixty and he only had $100,000 to invest. We had to talk about being realistic in his expectations.
In your preparation for the second meeting, complete your first pass of computer projections based on the solutions you think will work best for your client. Write down questions you want to ask to clarify certain points, and gather information about specific solutions. All of this will take time and energy, but it is essential to the process. The grunt work behind the scenes demonstrates that you are dedicated to your client.
Be well prepared for the second meeting. Before the client walks in the door, take a few minutes to go over your notes from the previous meeting. Think specifically about how your efforts will help him achieve what matters most to him. That should motivate you!
Information
Begin by thanking your clients for coming, and express your confidence that you are making great progress in shaping their financial strategy. Review what they said in the first meeting about what matters most to them to let them know you understand their dreams and goals. Use their own words and phrases in describing their dreams.
Explain that your analysis has brought up a few questions you want to ask them. Then ask your questions and write down their responses. Use this time, too, to invite them to ask any questions they may have about any part of the strategy.
Every company has its own instrument to determine a client’s risk tolerance and time horizon. The one I use contains ten questions and was developed by Standard & Poor’s. Become familiar with the one your company wants you to use, and gather any available information about your client’s tolerance for risk and time horizon. You may have already obtained this information. If not, be sure to get it now.
Determine the degree of flexibility of your clients’ assets. For example, they may have some funds tied up in CDs or bonds. The listing of assets they gave you in the first meeting probably provided enough information, but if you have any questions, this is the time to ask, especially if your solutions involve moving assets.
Education
If your clients are seasoned veterans in investing, you may not need to educate them on the fundamentals. Most people who come to my office, however, are novices. They may be surgeons, geologists, or executives in large companies, but their expertise is in areas other than investment strategy. It is helpful to take a few minutes to explain diversification, asset allocation, and dollar cost averaging in clear terms they can easily understand.** (For more on making these fundamentals clear to clients, see Chapter 7.) By the second meeting, you have already been evaluating the client’s financial position, so you can use his or her own assets as examples of how you might recommend diversification, asset allocation, risk tolerance, and so on.
Clarification
After asking and answering questions and explaining the fundamentals of investing, take time to clarify the process of developing a financial strategy. Explain that you will use the next week to finish your research, prepare your recommendations, and finalize their strategy. You will be ready to present it when you meet again.
Close the Meeting
Express again your confidence that your efforts will provide the right solutions to get your clients where they want to go and fulfill what matters most to them. Make sure they know that you are well aware of their priorities and that your final presentation will reflect those priorities. Thank them for coming and schedule the third meeting.
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Connecting your resources to what matters most
“Make Your Money Count stands out from other guides on money management because it drives home an important truth: Clarifying your purpose in life is the essential element in financial planning. The book offers an excellent blueprint for success and provides easy-to-follow steps that will align your money with your best intentions and put your finances in divine order.”
— Ken Blanchard, co-author of The One Minute
Manager® and Leading at a Higher Level
“As trusted advisors, we recognize that motivation is the key to change. In Make Your Money Count, Jim Munchbach provides powerful motivations to connect our finances with our purpose in life. This, I know, makes all the difference in the world. I enthusiastically recommend Jim’s book”
— Ron Blue, Kingdom Advisors