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Interactive Financial Planning


Last week I got a call from Kevin, a financial advisor who told me that he presented a financial plan to his clients in real time, which was apparently a huge success. I appreciated the update and got back to work.

It wasn’t until I received several other very similar calls that I started paying closer attention. I realized this wasn’t just a fad — it was a trend. When I looked back at the last 12 months, I noticed the most successful advisors all follow a particular pattern.

Instead of doing planning the traditional way, they adopted a new way to converse with clients by presenting their financial plans interactively. This new trend is a true game changer in the client-advisor relationship. The best part is that it takes almost no time to implement in your practice.

We call this new trend interactive financial planning because it’s based on a real time client-advisor interaction.

Why does presenting projections to your clients interactively matter?

The standard approach in the industry is as follows: you gather the client’s data, develop a plan, print a 50-page report, and walk the client through the report during the meeting.

While it may work for some clients, this approach is limited and not very effective.

Here’s what’s wrong with it:

  • It fails to discover all client goals. Essentially, it assumes the advisor and client are already perfectly clear on the client’s retirement goals and needs. In reality, the client’s goals may change; the client may not even be aware of some of their goals or may not be confident in knowing their needs. An advisor may simply miss the mark and fail to uncover previously undiscovered goals.

  • It starts the conversation in a negative way by focusing the client on a large shortfall required to funding their retirement. While this gets the point across quickly, a better way of approaching this is simply pointing out how long their money will last given their current spending or determining their maximum after-tax spending in retirement. This approach puts the client in the driver’s seat regarding their spending/saving decisions and increases their commitment to those decisions.

  • It wastes time. If a client decides to modify their goals or even make some small but meaningful changes to their plan, the whole effort of creating the plan needs to be repeated, often leading to follow-up meetings. Since any such updates may take a long time time, client engagement and satisfaction suffers.

  • It intimidates the client and makes them feel unintelligent. Most clients feel overwhelmed by long reports and complex plans, even though they may not say it. The truth is they don’t understand 50-page reports. Have you seen the way their eyes glaze over? They’re not trained to consume complex financial reports — that’s your job. They need something simple and meaningful, containing just the right level of detail that makes sense to them.

  • It doesn’t motivate the client to enter into a relationship with you, especially at the prospecting stage. Instead, it forces them to do a lot of work up front without seeing the immediate reward. Often just looking at the financial planning questionnaire is enough to scare prospects away.

  • It’s not interactive, so it’s not engaging. Printed reports are static. You can’t just increase your client’s spending by $3,000 a year in the printed report and show them how their money suddenly runs out at age 84. You can’t impress upon them the value of making even a $500/month contribution to their RRSP or TFSA and the positive impact on their asset growth. Low engagement reduces their ability to understand what really drives their projections, which leads to very bad financial decisions — the kinds of decisions from which they can’t recover.

Kevin and other successful advisors have figured out how to present financial plans in a way that completely engages the client.

Here’s an approach successful advisors have adopted in their practices:

  • While still prospecting, and even before asking clients to share their financial information, they show a sample set of projections. They point out the tradeoffs between contributing to an RRSP vs. a TFSA vs. non-registered assets, discuss taking CPP early or deferring it, and show the OAS clawback and talk about how to avoid it. They review estate taxes and bring up common issues, like not having sufficient insurance coverage to address a potential tax liability. Through this process they educate clients, show them the value of financial planning, and illustrate their own value as an advisor. At that point, the clients can’t wait to see projections with their own numbers. They have a huge incentive to work with you as an advisor, and it becomes easy for you to land new clients.

  • After the client engages them as their financial advisor, the advisor prepares baseline projections with possibly one or two alternative scenarios to get the conversation going. Once the projections are complete, they walk clients through their numbers. They confirm income, assets, and debt, making sure all the numbers are correct. This helps to reduce mistakes and clarify omissions.

  • When they show the projections to the client (often using a large screen in their office or a projector in the conference room), they don’t stop there. They modify numbers, re-run projections, and show the client the differences in real time. This is the moment when client engagement goes through the roof. Often, this leads to new information from a client or reveals interest in another set of goals. As an added benefit, after you explore the options together, there is a lot less need for them to play with the numbers on their own. Overall, clients feel more confident in the direction and become a lot more invested in the process.

  • Presenting clients their projections interactively is game changing. It allows you, the advisor, to have a much deeper, much more meaningful conversation with your clients. It also orients the clients on their financial goals rather than on market factors you can’t control, like the rates of return of particular stocks or funds in their portfolio. Instead, this approach focuses the conversation on what clients can control, like spending, saving, and building useful habits around their finances.

Working with a great advisor is one of the best decisions most Canadian consumers can make. At least that’s our view here at Snap Projections. A great advisor is someone who can help clients proactively address issues and help them achieve the most daunting financial goals, like a successful retirement.

Overall, this new approach does wonders for the client-advisor relationship. It allows you to build stronger relationships with your clients. Client satisfaction goes up with each meeting, so it’s no wonder that client’s share of wallet, and not to mention referrals, increase as well. Ultimately, this approach helps great advisors get an edge and differentiate themselves in the market.

Still not convinced?

You may want to read Diane’s story.

In less than 10 months, Diane managed to increase her client retention by 100% and boost referrals by 10%, all while saving a ton of time. She used the exact approach I talk about here. Diane is a veteran of the industry. She has developed over 8,000 plans in her career and she knows what works well. Here’s a link to her story.