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When it comes to financial planning, it’s impossible to create (and then implement) a plan that will improve a client’s life and help them reach their goals if the advisor doesn’t have the data to analyze the situation and formulate recommendations in the first place. Yet even though having the requisite data is the most important piece of a client’s financial puzzle... every advisor at some point experiences the challenge that it’s not always the easiest task to gather a client’s pertinent financial data in the first place. From a client’s perspective, the process of collecting all the necessary facts and figures and then entering it all into a multi-page intake form isn’t anyone’s idea of a good time… and the irony is that the clients most in need of help may not be organized enough to gather their information to give it to the advisor, to begin with. Which in turn raises the question: are there any better ways that advisors can get the data they need to do the planning work they’ve been hired to do?
In our 47th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss a few of the reasons why getting data from new clients may sometimes prove to be such a challenge, how advisors might shift their thinking around data-gathering to overcome the challenge, and some simple strategies to help clients get more comfortable with the data-gathering process itself.
As a starting point, it’s important for financial advisors to take a step back and consider why they’re gathering a client’s financial data in the first place. As while data is a wholly necessary ingredient in every comprehensive financial plan, it’s also important to recognize that financial planning isn’t an event that happens once and is set in stone forever; instead, it’s a process, and initial meetings with new (or prospective clients) are more about building connections and helping them be more comfortable, than they are about getting (potentially too) bogged down in the minutia of account balances and interest rate assumptions. That’s not to say, though, that advisors shouldn’t be asking great questions to learn about a client’s current situation and what’s most important to them. In fact, those are the key ideas and details that can then be used to identify what blanks need to be filled in first!
Meanwhile, advisors can also find themselves in situations where new clients simply aren’t organized enough to collect the necessary statements and get stuck in a downward spiral of guilty feelings over not being able to give the advisor the data that’s being requested. But it’s those clients who most need the help of a financial advisor who can live up to the profession’s promise of “helping people get their financial house in order and focus on a plan for their future”. Which means in such instances, instead of having clients gather, organize, and deliver their own data, advisors may simply wish to have the client bring in their piles of unopened statements… and help them through the process of sorting it all out (with the bonus of helping them finally truly get organized!).
Finally, advisors can also leverage the latest iterations of financial planning software packages to make data gathering more interactive and engaging for the client to want to get through the process. By building out the initial iterations of a plan with clients, not only will the advisor give them a more genuine and tangible financial planning experience, but clients can often get excited about the process itself and begin to feel the motivation to make sure it’s as accurate as possible when they literally see their financial plan taking shape before their eyes… and in the process, end out wanting to actively pursue any missing information that was needed in the first place.
Ultimately, the key point is to recognize that financial planning is a process rather than an event, building long-term relationships is more about making connections than collecting as much data as possible at the early planning stages, and often clients don’t have or know where all of their data is. And by making it easier to get started by meeting clients where they are with the data they have, and focusing on just the most important data points (which will vary on a case-by-case basis) in an interactive setting, financial advisors can demonstrate, in real-time, the connection between the data and the benefit that financial planning will bring to a client’s life.