Understanding what your financial planning clients really want

Understanding what your client wants rather than what you think they want is the key to avoid financial planning mishaps, explains Ray Griffin.

One of the most prevalent contributing factors in motorcycle accidents everywhere is a phenomenon known as ‘target fixation’.

Typically, it involves a rider becoming visually fixated on an object such as a tree or guidepost on the outside of a corner.

A motorcycle will track to exactly where a rider’s eyes are looking — and if that happens to be a fixed object, the risk of colliding with it escalates dramatically.

Simply put, you go where you look on a motorcycle and no amount of experience or training can totally immunise you from target fixation.

I was reminded of this reality recently when I met with some clients.

A failure to recognise that you’re fixated can have disastrous consequences on a motorcycle and, in the context of a client meeting, conversation fixation by a planner can lead to less than successful meetings.

Bruce and Julie have been clients for about four years and my last meeting with them reminded me that no matter how experienced and successful a financial planner might be, financial planning really is very much about people and having a deep understanding of human behaviour.

From my perspective this was to be a routine review meeting with these clients — albeit 12 months after the onset of the worst markets in 80 years.

Normally, I would have asked them if they had particular items for discussion.

However, without thinking, after a few minutes of small talk I moved straight into discussing the state of economic conditions and their potential effect on portfolio outcomes in the near to medium term.

I confidently set off on what I thought was going to be received as an informative summary of the situation.

As someone who enjoys understanding the macro data and then translating it into a language most people can understand, I was right at home — playing in my own sandpit, as it were.

But a minute or so into my commentary I noticed that Bruce was not tuned into the discussion — he was somewhere else in his thinking. He was looking out the window, drifting away, deep in thought —whereas I could see Julie was evidently at least somewhat interested in what I was saying.

Then Julie also noticed that her husband was somewhere else and alternately darted her eyes to her husband and back to me trying to catch his eye in an effort to coax him back to the meeting.

After another minute or so I found the words to bring that segment of the meeting to a summary.

Then I deliberately paused and waited for what seemed like half a minute or more, but was probably more like five seconds. Julie stared at her husband with what was quickly becoming a concerned look on her face.

As the silence continued, Bruce finally began to re-engage but kept looking out the window. Although I had seen this behaviour in him before, I was wondering whether or not he was annoyed about something. The markets in general?

The short-term performance of the latest tranche of new capital into the portfolios that was being staggered into the markets? Or — it struck me — could he have been annoyed at what he might have thought was going to be a long-winded ‘state of the nation/world’ commentary from me?

The first words to emerge from him were: "Yes — yes — well — something we need to talk about is a few things we need to spend money on."

He then listed a range of capital expenditure items. I was struck by the shift in conversation topic in less than 10 seconds — from world macro-economic conditions to getting the road to their home re-gravelled.

He spent the next couple of minutes speaking to me but looking at Julie while notching up the list of expenses.

As Bruce moved through his list I noted them down one by one on my notepad while silently chiding myself for having been so assured of what I wanted to talk about that I missed what was driving his main concern that day.

In heading off into my commentary, I moved straight past the opportunity to check in with him and Julie on key concerns.

In my mind, the most important commentary for the meeting was going to be the macroeconomic overview but for my client, the need to get some comfort about spending some of their capital was far more pressing.

Having sat in thousands of client meetings I should have known better — I do know better — yet for a couple of minutes at least I missed all the signals Bruce was sending me as I spoke.

In my mind I had fallen short of what I expect of myself and, I realised, I had become fixated on what I wanted to say — not what was top of the list for my client.

To correct a mid-corner target fixation situation on a motorcycle the only option is to metaphorically ‘push’ one’s eyes off the target and through to the exit of the corner.

If you aren’t going to quickly, it works brilliantly. In a client interview, one way to engage clients who are detached from what is being said is to stop talking and allow them the space to speak.

Newer planners have a tendency to become nervous and do too much talking in client meetings. Granted, talking is required to ask questions, but there is an enormous gulf between asking questions and dominating a conversation.

Experience, technical knowledge and skill are no guarantee of successful client meetings. Similarly, no matter how many thousands of corners traversed by a motorcyclist, there is a constant risk of fixating in the next corner.

On a ride across the Great Dividing Range to the coast last year, after a lifetime astride two wheel vehicles, I momentarily fixated on a tree adjacent to the outside edge of a corner about halfway into a 45-kilometre descent.

Thankfully, I knew what to do as soon as I realised that my eyes were glued to the tree.

Similarly, in the meeting with Bruce and Julie, as soon as I realised what was happening, I knew how to correct my behaviour in order to coax Bruce back to the conversation.

Nervousness or, paradoxically, an overabundance of confidence and pride in a job largely well done can see a practitioner fail to see the signs of conversation fixation.

An ability to understand human beings at an intuitive level is one of the greatest attributes a financial planner can possess.

Some people are born with the intuition to read people, but for the rest of us it takes time, careful observation and thought to ‘read’ what someone is saying when they’re not speaking.

Sitting back immediately after a client meeting and reflecting on how it transpired is one way to begin to build a portfolio of experiences which will aid the conduct of future client meetings.

Successful financial planners are masters of a variety of skills and abilities that must be carefully blended to suit a kaleidoscope of human behaviour across their client base. Knowing when to say so much more by saying nothing is an art in itself.

Ray Griffin is a director of Capricorn Investment Partners.