In an earlier post, we explored the all-too-prevalent malady of “benchmark – itis” – that is, measuring wealth management success solely in terms of investment performance.  In this follow-up post, we look at practical techniques advisors can use to to transform their conversation with clients – and indeed their whole practice – to a “goals-based” model.

Numerous studies document that wealth management clients favor a holistic, goals-based approach over a product and performance approach.  How can advisors make this approach central to their practice and get buy-in from their clients?  Here are a few concrete suggestions:

Introduce a goals-based approach right at the beginning.

·      At your very first meeting with a new prospect, explain that your process is planning-based, with the key objective being to meet the client’s wealth management goals.

·      Pinpoint exactly what the prospect’s real-life goals are.  People will rarely describe these in terms of investment performance.

·      Get an agreement from the prospect that success will be measured in terms of meeting the goals they have identified, not investment performance.  If you help them meet their goals, you should get an “A”.  You will of course report investment performance on a regular basis, but the key measure of success will be the achievement of the client’s goals.

·      Lay the groundwork for asking for referrals based on successful achievement of goals.

Document the primacy of goals.

·      Every firm has an “Investment Policy Statement”.  This only serves to over-emphasize investments.  Use instead a “Wealth Management Plan”.

·      In the Wealth Management Plan, document the client’s goals (financial and other) and make it clear that achieving these goals will be the key measure of success.

·      Also include a “service protocol” – e.g, the frequency and content of client meetings, calls, etc.  Make this a key part of meeting the client’s goals.

·      Get the client(s) to sign and return the Wealth Management Plan.

Organize client meetings around goals.

·      Every firm has a standard client review report.  Too often, these reports are filled with pages and pages of investment statistics, and very little discussion of client goals.

·      Restructure your meetings and reports, as follows:

o   Begin by asking the client for a personal and financial update. Are there any important changes?

o   Confirm the goals in the current Wealth Management Plan.  Are any changes needed?

o   Ask the client directly if you are meeting their goals, both financially and from a service perspective.

o   With this as background, then review the investments. Here the focus should be on performance in the attainment of goals vs. raw numeric performance (I.e. Benchmark - Itis.)

o   Document all important changes in a revised Wealth Management Plan, mail it to the client and get the client to return a signed version.

Make sure all your materials focus on goals.  

·      Standard Investment Policy Statements and client meeting reports are two of the more notorious offenders in setting a focus on performance vs. wealth management goals.  But there are many other areas where you may be undermining the goals-based approach.

·      Make sure all your materials underscore your focus on goals: brochures, flip books, websites, newsletters, client satisfaction surveys to name just a few.

Follow these simple suggestions and you will transform your practice to a truly goals-based culture. Your clients will be happier, and so will you!

For additional information on important wealth management issues, please go to my blog, peterculver.blogspot.com, or visit me on LinkedIn, www.linkedin.com/in/pculver.