Podcast Episode 301: Why the Customer Isn’t Always Right in Financial Planning
In nearly all of the retail, restaurant and hospitality world, the old saying is that “the customer is always right.” But when it comes to financial planning, it’s probably not wise to subscribe to that idea. What’s the point of having a financial coach if your advice is better than your coach’s advice?
Let’s talk about some statements you might hear from clients that might require you to push back because the customer isn’t always right.
- “Now is the time to get into or out of the market.” With the stock market ever-changing and unpredictable, you will have clients who think they can time the market. Convinced that they’re right, it can be difficult to explain why trying to pick when to get in or out of the market is a bad idea. It may require engaging with them on their terms and talking about what kind of risk they’re willing to take.
- “This is what I want to invest in. Now I just need you to pick the exact funds for me.” Many clients want their financial planner to be their investment manager. While it is important to understand the client’s goals, there are many considerations that have to be discussed and weighed in order to build an effective portfolio. You can help them understand why they need to take a more holistic approach rather than just picking one asset or fund.
- “No, I don’t really want to spend money on _____.” Some people have their minds already made up that a certain investment or product isn’t a fit for them. That might be because a friend or co-worker told them something negative, they heard an expert say something, or they just don’t understand it. Exploring the pros and cons of their decision with them can help them think more objectively about what’s best for their financial goals.
- “It’s fine that the returns aren’t very good because the fees are low.” Many people focus on the fees when picking investments, and they can approach it from both sides. Either they stick with an investment too long because the fees are low or they avoid an investment with high upside because it has higher fees. In either case, it’s important to explain the importance of looking at fees and returns together to determine which option is best for you.
No matter what your goals or objectives are, our process always begins with that Money Map review so we can begin the conversation.
Here are some of the things we discuss in this episode:
1:05 – When someone says, “Now is the time to get into or out of the market.”
2:24 – “This is what I want to invest in. I just need you to pick the exact funds for me.”
3:07 – When someone doesn’t want to spend money on a certain product or investment.
4:21 – When someone makes up their mind on an investment strictly based on fees.
5:42 – “My accounts are down right now so I don’t think this plan is working.”
8:12 – A Women’s Word with Heather Atkins: How women approach investing.
13:57 – Mailbag question on saving strategies close to retirement
15:30 – CEO’s Corner with Joel Johnson – The labor market
