March 17

True financial planning is more than numbers

As a financial advisor, one might be a well qualified person excellent with numbers, but the only thing that makes him stand out is the way he interacts with his clients. In the last few years I have realized that the financial planning exercise goes beyond number-crunching plans, asset allocation techniques and investment strategy. The relationship between a financial advisor and her client is more or less business centric however most of the clients don’t trust advisors who come only with a business mindset. It makes them comfortable only when they perceive their advisor as a partner in handling their money, a “fiduciary” as we say. Clients appreciate a person who besides managing their wealth also understands them as individuals and respects their viewpoint about money.

Here are some ways to gauge if your financial planner is making attempts to understand you well. These techniques have been acknowledged by my clients as effective ways to build a results-oriented partnership.

Asking the right questions?

It is essential that a financial advisor first understands the client’s relationship with her money. This can be done through intelligent questioning techniques that involve open and closed ended questions; Open ended questions help financial advisors get a clear understanding of what a client has in mind while closed ended questions will help to confirm a fact that a financial advisor believes to be true about her client. Questions around the most important things in their life, meaning of financial well-being to them, meaning of retirement to them, the most important change they would like to undertake in their life and their objective from the relationship with their financial advisor, are thought provoking and likely to elicit facts the advisor must make a note of. During her questioning technique keeping the focus on client’s aspirations, perspective about money, emotional needs driving her financial goals and tolerance to uncertain financial outcomes, will always help.

Addressing clients concerns in the initial meetings, assuring her of a better outcome emerging from the relationship and creating a non-judgmental framework for all her conversations with the client, is the key to creating a foundation of trusted relationship with the client.


Understanding behavioral aspects?

Every client is unique. Although, the questions a financial advisor initially asks the client will help her get a broad idea about client’s goals & money perspective, however she needs to further examine the client behavior to figure out the way forward for her i.e. her desired outcome and participation level in the advisor process. An individual’s perception of financial well-being depends on her relationship with herself and with others around her. Behavioral aspects go beyond understanding the risk tolerance of the client. It is vital for a financial advisor to understand the client from the core and take into consideration the education, professional environment and values that have shaped her money personality.

When a person seeks financial assistance there is usually a life situation that triggers it. A financial advisor needs to figure out what that particular situation(s) is and what internal and external factors led the client to meet her. Although, external factors such as market conditions are easy for a financial advisor to address, it is the behavioral aspect that needs to be understood and that is, indeed, complex. An advisor must keep a note of client’s cultural factors (like religion & geographic group), social factors (like occupation & education), personal factors (like age, family & type of personality) and psychological factors (like motivation, beliefs & attitude). These facts are likely to throw some light on client’s behavioral traits.


The most effective financial planning is the one that involves counseling. By counseling I do not mean telling a client where to invest, or highlighting problem areas in her financial life, but it is guiding her through the whole process of change so she understands why it is being done whatever is being done. Her emotional buy-in is a must. One should not confuse counseling as a corrective technique for an identified problem. It is indeed a process to change the client’s perspective. If that requires time, so be it. Creating the change in her matters the most, for her to extract value from her relationship with the advisor.

Counseling is more about explaining how your recommended steps are going to help the client get closer to her financial goals. Empathizing with a client can take the business relationship with her to another level. Some areas where counseling technique creates great impact are discussions around asset allocation & distribution, investment planning, savings with focus on future goals, pre-retirement and post-retirement financial scenarios.

Remember that the financial planning is an on-going process rather than a series of transactional conversations. To make the most of your partnership with an advisor be open with her and allow her to build a deeper understanding of the factors that would influence change in you and make some progress in the process.


Behavioural Finance, Financial Planner, Financial Planning, Risk Analysis

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