Years ago, when I was entering into management, another manager explained: “When you move to a different office in another city, you will see the same advisors. The names and faces are just different.” What he meant was certain personality types are prevalent. This good advice applies to clients too.
When you advise clients, you come across situations you have seen before. A certain 50-year-old client needs to prepare for retirement, but is behind on their saving and investing. You might have a strategy on hand, but you cannot simply put it out there. Every client feels their situation is unique and deserves careful thought. This holds for client personalities too.
The Client Who Lives in the Past
The client who lives in the past is often older. They have an excellent memory. They can remember long term 30 year municipal bonds paying 9% like it was yesterday. They are waiting for those to come back. They seem unaware those high coupon bonds matured over ten years ago. They complain about restaurant and grocery prices. Do not get them started on college tuition! If they have promised to pay for a daughter or granddaughter’s wedding, expect sticker shock.
How to work together: If they own equities, they have likely held the same positions for a long time. That is a good thing. If they are charitable, appreciated shares might be good for their planned donations to their college or other charities. When they complain about food and restaurant prices today, remind them of the average salaries in the US at that time. This should help put things into perspective. If they have held their favorite stocks for decades and the companies are good, they might be open to adding to their holdings, assuming it does not create a concentrated position. If their house needs a new roof and they are holding off because they think prices are too high, remind them costs like that tend not to come down. A leaky roof only gets worse. It will cost more, regardless. Focus on their projected spending in your retirement plan review. Let them know they can afford to enjoy themselves, if that is the case.
The Client Who Lives in the Present
These clients often live boring lives. If they are older, they put one foot in front of the other and trudge along. One day is like another to them. If they are younger, they are living”for the moment.” They are spending everything they earn and more, running up credit card debt. They live very full lives and it is costing them. Someday, these bills will need to be paid. In many cases, these younger clients are not saving for retirement.
How to work together: The client who lives in the past needs to transform into the client who lives for the future. If they are older and financially secure, they should know they are well prepared for the future and even have money to spare. They could start thinking about getting involved with some local nonprofits or community groups. They can travel more. Having vacations to look forward to moves them away from thinking day to day. Travel gives them the opportunity to make new friends. If the client is younger and spending everything they earn, try to get them to embrace financial planning. Saving and investing towards financial independence might get their attention. Does your client know where their money goes? Do they have a plan for paying down their high interest credit card debt? Hopefully they can see where this lifestyle is leading from a financial viewpoint.
The Client Who Lives in the Future
In many cases, this is the ideal client. They are focused on a goal and have a plan to get there. As they say, “A goal without a plan is just a dream.” Not your client. They are studying for an advanced degree. They are controlling their spending to maximize saving. They might even be on a weight loss program. If someone asked them: “Where do you see yourself in five years” they have a great answer.
How to work together: This is a rewarding type of client personality. If your approach to life is similar, you can bounce ideas off each other. You can help them plan for retirement, projecting outcomes and probabilities. The problem that can develop is deferred gratification. No one wants a weight loss program focused on starving yourself. It id easy to get discouraged, especially if you do not see progress in leaps and bounds. Help them to measure progress in multiple ways. Encourage them to have fun. Focus is fine, but they need to lead a balanced life. Do they have outside interests? Perhaps you can learn about some and suggest a few. You should also be supportive. Congratulate them when they achieve certain goals. Celebrate with them. Be encouraging.
When client personalities are concerned, a “one size fits all” approach rarely works. You need to align them with a profile and give them the appropriate encouragement. This should help build a long-term relationship.
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