06 June 2017
Goals-based advice using the ‘life event’ paradigm
In our last Business Growth Hub article (What is Goals-Based Advice?), we talked about the value of Goals-Based Advice and its role in helping you build long-term, profitable relationships with your clients. We advocate a set of techniques that let you connect to your clients at a deeper level, thus creating the kinds of relationships that lead to more opportunities for your business.
As part of the development of a financial plan, we discussed a technique for identifying client goals using the ‘life events’ concept in a client conversation.
In this article, we’ll explore an approach that converts these client life events into goals. The result of this process is the creation of a financial plan that reflects the real motivations of the client, and a stronger, more connected relationship with the adviser.
Life Events: a recap
Life events are simply those things happening in a client’s life that influence their financial situation in either a positive or negative way, and over the short or the long term. Examples include ‘renovate my home’, ‘help my children with a deposit for a house’ or ‘go on a holiday to New York’. In the previous article, we suggested engaging your clients by asking them to identify their life events because it’s an easier and more practical way to begin to understand your client than simply asking for them to state their goals (which they’ll often be unable to do: they are coming to see you to do just that!).
Defining goals vs. life events
Once your client has identified their significant life events, the next step in the process for developing a truly goals-based financial plan is to convert these events into goals. We’ll step through some tips for doing this, but firstly, let’s differentiate a life event from a goal:
Life Events |
Goals |
Happens to me (eg. ‘Getting married’) |
An outcome for me (eg. Enjoy financial security in married life) |
An activity (eg. ‘Send my children to private school’) |
A state to achieve (‘My children receive a private school education’) |
Something I choose to do (eg. ‘Join a gym’) |
Something I’d like to achieve (eg. ‘Be able to run the New York Marathon’) |
While they initially seem quite similar, there are some subtle differences that really highlight the goal’s role in building a strong emotional connection between the adviser and the client. Goals focus on a client’s future state: where they’d like to be as a result of the specific life event. In summary, a life event relates more or less to an occurrence in your client’s life, while a goal is something they are striving for.
Engaging your client
So how do you engage your client to identify their underlying goals from their life events? We would argue that the most effective way to do this is to firstly create an active listening environment, and then use open-ended questions to delve into the client’s attitudes, beliefs, values and motivations. Here’s an example role-play for converting a life event into a goal, demonstrating the above techniques.
Adviser |
“You’ve told me that an important life event for you right now is to renovate your home. Tell me more about that?” |
Client |
“The house we bought 5 years ago is quite old, and hadn’t had any work done on it for years. With an expanding family, we thought the time was right to renovate” |
Adviser |
“How will your life change as a result of the renovation?” |
Client |
“We were brought up in an environment where spending money on the home was regarded as a superfluous (and frivolous) activity. However, we believe that the money is well-spent: as well as being able to give us enhanced enjoyment of our home, we also believe that renovation is a legitimate ‘investment’ approach. |
Goal |
“Own the home of my dreams and improve its value” |
You can see that as the conversation progresses, the client is guided down a path of open ended exploratory questions that force them to think about their own attitudes, beliefs and values in relation to the life event. This will steadily lead to the identification of their real goal. A conversation that continually probes the client’s rationale for choosing a particular life event usually uncovers the client’s unspoken rationale, and the desired ‘future state’ that represents the goal itself.
‘Good’ goals and the ‘right number’ of goals.
A client’s financial plan considers their life events and goals as part of the plan. To ensure that any goals you identify are meaningful and relevant to the client, use the M.E.T. acronym to guide your questioning and validate the goals you uncover during the conversation:
Ask the client the types of open-ended questions that help build the basis for the identification of a good ‘M.E.T-consistent’ goal. This usually means repeatedly incorporating the words ‘Why’, ‘What’ or ‘How’ into your questions to give the client ‘permission’ to expand upon their initial life event. Here’s another example of a role play used to uncover a client goal, using ‘M.E.T’ – type questions:
|
Adviser question |
Client response |
M – measured |
“How will you know that your renovation has been completed?” |
“By lock-up stage, which must be at least a month before I have the baby.” |
E – explored/explained |
“Can you describe the benefits of living in a renovated home to me?” |
“I have always lived in shared or unrenovated houses, and I now see an opportunity to live in something close to my ‘dream home’.” |
T – timed |
“When do you expect to have your renovation complete?” |
“By Christmas 2018 so we can maintain a tradition of inviting the extended family over for Christmas lunch” |
You can see that by sticking to exploratory, open-ended questions, your client will expand upon his/her rationale for identifying a goal, and a bit of intuition on your part should allow you to document the goal itself for immediate verification by the client. Remember the definitions of a goal (discussed earlier) to ensure that what you’ve identified is truly an actionable goal for your client.
What’s next?
At this point, you and your client should have a plan that reflects their own lives, and their own goals. Each plan will be highly unique to the individual and their circumstances which helps build a stronger relationship with you, the adviser. You can now use what you’ve documented to inform you about the right financial strategies that maximise the chance of your client achieving the goals they have identified. The result of adopting a life event/goal –based approach to your client conversations is the creation of deeper, more emotional connections and the kinds of relationships that can help you build your business with a set of clients that you really understand, and who trust you implicitly.
The LifeXplorer App
The techniques above are all reflected in our iPad app called ‘LifeXplorer’. The app uses the methodology described above in a simple, attractive and easy-to-use way that allows you to have highly effective goals-based conversations with your clients. To see an overview of the app, we’ve created a short video, and we recently held a webinar where we discussed the techniques described above, demonstrated by the use of the LifeXplorer app in a client/adviser setting. You can view the webinar for free here.
To find out more about the app for iPads, you can download a free trial version – just search for LifeXplorer in the iTunes store. To unlock the app’s full functionality, you can subscribe to the app, giving you access to unlimited plans and a range of support offerings to help you get the most out of your goals-based conversations with your clients.
This article was written by Global Advice Training Education
