The hardest question an adviser can ask

Alex Burke,  Senior Writer,  No More Practice Education

According to Advisor Insights Inc president Mitch Anthony, there's one question advisers should ask that is rarely addressed: “What is the money for?”

Speaking at the 2018 Financial Planning Association Congress, Anthony said the question cuts to the heart of what the planning profession is all about. “Too often,” he explained, “we frame our lives as the process of gathering money. In fact, the purpose of gathering money is to live our lives. So, as an adviser, life has to be at the centre of the conversation.”

 

Relative investment performance: RIP?

This means, he continued, that framing your value proposition in terms of relative investment performance is a fool's errand.

“If you're focusing on ROI,” he said, “you're basically working year in, year out trying to beat back the other planner down the road. It's unsustainable.”

In other words, comparisons are odious.

“I've never understood comparative returns,” he said. “Since when is comparison a good measure of progress?”

 

There's always a bigger boat

Describing comparison as the “killer of contentment,” he related the story of a friend who used to take his boat out on Lake Michigan.

“When he was out on the water,” he explained, “it didn't matter if he was in a 50-footer or a dinghy. He was just where he was, and he was relaxed. It was only when he came into the harbour that the 50-footer felt like a dinghy.

“Effective progress can only be measured on a highly personalised basis.”

 

What does this mean for me?

While these comments were framed around investment performance, he said the sentiment applies to running an advice business as well.

“Think of the idea of ‘practicide,’” he said. “Building a business that's designed to kill you.”

He recalled a conversation with a planner he knew, Dave, who had 1,500 clients: “I asked, ‘Do you really have 1,500 clients? Or do you have 100 clients and 1,400 dissatisfied customers?’ He said if I was framing it that way, I might as well make it 1,404, because he had to include the wife and three children he never had time for.”

What he meant was that the emphasis on unsustainably growing a business both led to client disengagement and, worse, a troubled personal life.

He opined that what advisers tell their clients reflects on their own approach to money, which he said should simply be “a utility that we skillfully manipulate in order to navigate.”

“Change the conversation from whether you have enough money,” he said, “to whether you're managing money in a way that improves your life. Because ultimately, the easiest way to make God laugh is to show him your five-year plan.”


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