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Drills, Holes and Financial Planning

Sometime ago I read an interesting article which stated that people don’t buy drills because they want a drill but because they want a hole.  Why do they want a hole? Perhaps to hang a piece of art which looking at provides pleasure.

This is a case “Why” we want something, “How” are we going to achieve it and “What” are we going to use.

If we break this down, “Why” is to the art enjoyment of the art, “How” is the hole, “What” is the drill.

What has this got to do with Financial Planning?

Well in the financial planning world the “Why’s” are the lifestyle/goals/objectives that our clients want to achieve. The “How’s” are the financial plans we craft together to achieve them and the “What’s” are the financial products such as pension and investments.

Logically we should start with the “Why” but often I see the opposite, advisers talking endlessly about the financial products (What’s).  This is understandable as to qualify as an adviser we all need a high level of technical knowledge and many advisers might feel they need to demonstrate this knowledge to their clients (which I agree is important but at the right time) and/or their clients want to talk about such matters – this has not been my experience.

The value is finding out the “why’s” first and then the How and What come naturally afterwards. This needs a different approach, one where lifestyle/goals/objectives are discussed in a frank and open manner. Some advisers may find this uncomfortable but for me this is the best way to put meaning to a client’s money. My experience is that clients really value these conversations as they are unlikely to happen anywhere else.

The long term benefits of this are significant – for example, I recently met with a client for their annual planning meeting. They told me how much less they worry about money now that we work together and they understand their investments are matching their lifestyle requirements (the “why’s”).

Next time you meet with a Financial Adviser consider whether they seem more interested in the drill they might recommend or why you want the hole in first place.