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Lost and found

Ask the right questions and even the most uncertain of clients can be put at ease in a first meeting

Our investments have dropped significantly and we feel lost. What do you do differently from our existing IFA and can you help us?

Bill and Mary came to see us on the recommendation of a close friend of theirs. Bill had retired early from a high-powered, stressful job. In 2007, the couple had put a seven-figure sum into an offshore bond with a discretionary manager in place and were taking substantial regular monthly withdrawals to cover living expenses. Since the credit crunch, they had met once with their discretionary manager and had cut their monthly withdrawals in half. However, they were unsure as to whether they were doing the right thing and how long their money would last.

In a first meeting with a client, it is imperative to find out whether the professional relationship between financial planner and client will work.

The first consideration is whether we like and respect each other enough to look forward to meeting year after year? The second, can we add value to that client’s objectives and goals over the years ahead? Finally, will that client become a profitable client to our business?
After Bill and Mary had explained what had caused them to drive the 80 miles to our office, I explained that the large screen in our meeting room allows us to do effective planning with our clients.

Having set up the template for a married couple, I asked them for all their financial assets, liabilities, income and expenditure. We then agreed a set of assumptions for investment growth, inflation and longevity.

Within half an hour, we had arrived at the very first cashflow as I described that the picture on the screen was their readily realisable assets.
I assumed that if they both lived to the age of 100 with no catastrophes then, based on the assumptions they had agreed, they had enough funds to meet their objectives. However, I stressed that all this was based on assumptions and the only certainty in life is that things change and therefore we would need to revisit this regularly.

Many advisers feel that you should not go to this extent in the first meeting but, in my opinion, this is the only way to verify my second and third criteria for taking on a client. Can we add value and will they be profitable clients?

It also shows them their future financial story is the important factor and that the investment strategy – which products to use within that plan and where and how to invest – is all part of the jigsaw.

The couple had expected me to put forward an alternative investment strategy that would limit the downside risk but, without doing the risk tolerance tests, we could not cover that at the first meeting.

I explained that would come at our next meeting and what they should do in the meantime to complete our personal financial summary as well as our ’What do you want to do with the rest of your life?’ questionnaire and the risk profiling. In addition, we ask for a more thorough look at their expenditure and now that they had seen their first plan draft, to take away copies and think of what else they may want to do.

We set a deadline for them to return their forms and arranged a date for the next meeting. They completed our standing order, signed our terms of business/client agreement and left our office considerably more relaxed than when they arrived – the start of a new planning relationship.

Yvonne Goodwin is managing director of Yvonne Goodwin Wealth management


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