Special Feature

The planning process

This three-part series on the planning process offers suggestions for successful discovery meetings, how to present a financial plan and ways to elicit feedback from clients.

Financial Planning

There’s more to knowing your clients than checking off boxes

By Brent Jolly |

Following a process is key to building effective financial plans, says Keith Costello, president and CEO at the Mississauga, Ont.-based Canadian Institute of Financial Planners (CIFPs).

The first step, Costello says, is to conduct a series of "discovery" meetings, in which you to get to know your client and what he or she is looking to achieve from the financial plan.

"If you haven't done the right thing in the discovery meetings," Costello says, "[those omissions] will manifest themselves later on in the process."

With that in mind, Costello offers the following suggestions to help you get the most from your discovery meetings:

1. Listen carefully, always
At every step of the financial planning process, listening is the single most important part of your job as a financial advisor, Costello says. This is particularly important in the early discovery portion, when you are getting to know your client.

Be sure to ask clients straightforward, open-ended questions and let them tell you their story.

2. Have a frank conversation
It might sound obvious, but you need to work with your client, because developing a plan is a consultative process.

"[Clients] want to create a long-lasting relationship, not just a one off transaction," Costello says.

So, you need to have a frank conversation with your client in order to understand his or her concerns. This is much more than checking off boxes on a questionnaire about risk tolerance. Clients are coming to you likely because they believe you can offer specialized help, not to be treated as a number.

3. Demonstrate compassion
Show your clients empathy and respect when they are explaining their life situation, particularly any health-related issues.

"Not all clients are comfortable talking about their private lives," Costello says. "And the discussion might cause some anxiety or fear."

Having a little compassion can go a long way toward helping you stand out from others in your field.

4. Identify each client's literacy level
While you shouldn't generalize about your clients, it does help to identify your client's level of financial literacy early in the discovery process.

Determining your client's level of technical knowledge will help you find the best way to frame your discussions of your products and services. This will help you to customize your work to each client's needs.

"If you come with a bunch of technical [jargon]," Costello says, "they aren't going to relate very well to you."

This is the first article in a three-part series on the planning process. Next: How to present a financial plan to your client.