Forget “the birds and the bees,” here is a recipe for the most uncomfortable but necessary conversation you’ll ever have with your clients. Get your pen and paper.
Over time, good advisors come to know more about their clients than their balance sheets and risk tolerance, but there are key details about their lifestyles that every advisor should know upfront in order to better align the portfolio with the person.
Inspired by Business Insider's investor checklist, here is WP’s Top 3 necessary-but-awkward questions every advisor should ask every client.
Be warned, the questions can be as difficult to ask as they are to answer.
1. Is there a substance abuser in the family? The reason for the question has everything to do with protecting the client and the client’s estate from theft, say advisors. It’s also about keeping an eye open for any unexpected moves or changes to both tangible and intangible assets.
“A client with a loved one who is addicted is more vulnerable to misappropriation of funds and so is their estate,” GTA financial planner and mortgage professional AJ Mukalejekr tells WP. “You just have to hope the client actually knows about the addiction.”
2. How sound is your marriage? A relationship in trouble hints at the real possibility your client is eventually headed to the divorce courts. To the extent that you can prepare him or her for the financial shock that comes with divorce, you should be actively doing that, says Mukalejekr.
“I once consulted with a family lawyer on behalf of a client who was seemed ready for divorce because I needed to know what investments would better protect (the client) in that jurisdiction,” says the seasoned Toronto advisor.
3. How’s your health? A client struggling with health issues is generally under emotional and financial stress – even in Canada where socialized medicine reduces some of the latter. By knowing the exact nature of the disease, whether it’s a chronic or acute illness, the advisor can tailor the financial plan to meet the income needs of the client.
“There’s no point in focusing on high yield, risky investments when the client is facing a long-term incapacitating illness,” says Mukalejekr. “The client may not be in the correct frame of mind to tell you all of the details, so you may have to do the research yourself.”
What's your most awkward question for clients? Add your comment just below.
