007: Increasing clients clarity and confidence with goal-based planning

April 18, 2018

At its core, financial planning is about helping clients use their resources in a way that will effectively achieve their most important goals. This means that goal-based financial planning is a natural choice for advisors who want to ensure that their clients are having their most important needs met.

Today’s guest is an experienced advisor who has a keen understanding of goals-based financial planning. Ethan Astaneh is from Vancouver and a graduate of the Sauder School of Business at the University of British Columbia. He is a Certified Financial Planner, member of the Financial Planning Standards Council, and Financial Advisor at RGF Integrated Wealth Management. RGF has 60 staff including 17 advisors, with $2B AUM. Listen to the episode to hear what Ethan has to say about goal-based financial planning.

Topics Discussed in This Episode:

  •     Goal-based planning and why it’s useful for clients and advisors
  •     How Ethan was inspired to get into goal-based planning
  •     How to make goal-based planning more practical for clients
  •     How a goal-based approach compares to a more traditional approach
  •     How to help clients prioritize their goals
  •     The value of goal-based planning for the financial advisor and the advisory team
  •     How to help clients understand the value of goal-based financial planning
  •     Some of the tools Ethan uses to implement a goal-based planning approach
  •     How often advisors should update clients on how their strategy is performing
  •     How advisors can get started in goal-based planning

Links:

Ethan Astaneh

RGF Integrated Wealth Management

A sample what Ethan’s clients’ dashboards look like

Quotes from Ethan:

“The outcome [that we were after] was increased confidence and clarity for our clients in what we were doing for them and why we are doing it that way.”

“It really starts at the onset in engaging the clients in dialogue and going through the process of separating the must-happen goals from the want-to-happen goals and also identifying what’s actually not important to them.”

“You can define risk in many different ways, but from a planning perspective, we define risk as the probability of not achieving a goal.”

We’re sure you don’t want to miss anything that Ethan has to say, so make sure you listen to the full episode above. Here, we’ve given our quick take on three key ideas that we think you’ll find valuable:

  • Understanding goal-based planning and why it’s useful for clients
  • Helping clients prioritize their goals
  • Getting your clients excited about goal-based planning

For more on how Ethan got started with goal-based planning, how he implemented it into his practice, and more, listen to the full episode through the link above or find it on iTunes or Stitcher.

Goal-based planning and why it’s useful for clients

Goal-based planning combines comprehensive planning and investment strategy. It allows you as the advisor to confront the fact that all financial goals are competing against one another and create a plan that ensures clients can achieve their most important desires. Essentially, it means creating a sub-portfolio for each goal, personalizing client’s experiences and ensuring a holistic approach to their wealth management.

When RGF adopted goal-based wealth management, Ethan was surprised by how easy it was to implement into his practice and how positively clients responded.

Why do clients love it so much? It all comes down to two key benefits:

  • It helps them gain clarity: Most people have a rough idea of what their goals are, but you can help clients articulate that vision and make it a reality. Goal-based planning gives them a framework for making decisions and allows them to focus in on things they can control ‒ namely, their goals and behavior ‒ and to block out unnecessary noise.
  • With clarity comes confidence: Clients can really connect the numbers in their portfolio to their goals and desires and have confidence that they (and you) are making them become a reality.

In turn, of course, you will likely find that happier clients provide more referrals. Plus, who doesn’t love working with focused, happy clients?

 

Helping clients prioritize their goals

Ethan shared his process for helping clients identify and prioritize their goals to come up with the ideal investment strategy that’s relevant to their situation and their goals.

The key is to commit to having a meaningful, in-depth discussion about their goals. This isn’t just a point to check off on a list of questions. Ethan sees this process of drawing people out as more of an art than a science, but here are the basic principles to follow:

  1. Get clients to articulate their goals. For example, many young families want to save for their children’s education, but what does that really mean? For many, it actually means giving their children every opportunity to succeed and get established in the world.

Hint: Keep in mind that goals evolve over time. Using the above example, clients may think the only path to success is a traditional education, but that may change over time.

  1. Help clients test and rank their goals, realizing that all goals ‒ saving for their children’s education, paying off a mortgage, retiring, and preparing for unforeseen healthcare costs ‒ are in direct conflict with one another since they’re all coming out of the same pot of money. The way Ethan sees it, the crucial thing is “engaging the clients in dialogue and going through the process of separating the must-happen goals from the want-to-happen goals and also identifying what’s actually not important to them.”
  1. Come up with an individual strategy for each goal. Each goal has a different value to the client, a different timeline, and different requirements, so this is the cornerstone of goals-based wealth management.
  1. Finally, synthesize. Connect each goal to a comprehensive investment strategy and decide on the appropriate asset allocation.

Hint: Ethan emphasizes that the way RGF uses goal-based wealth management is just one possible iteration of the strategy, and he recommends researching other ways people have used it. Reach out to advisors who are using goal-based planning and learn from their experience.

Getting your clients excited about goal-based planning

It might seem daunting to have to retrain your clients to think goals-based. However, it’s a lot easier than you would think with these two tips from Ethan:

  1. Have a clear, well-designed visual to make it intuitive for clients. Help your clients understand how the purpose connects to the strategy. You can see an example of what Ethan’s clients’ dashboard looks like here.

  2. Do this in a repetitive fashion to keep it consistent and help them get used to that way of thinking.

For more from Ethan, make sure you check out the full episode ‒ we hope you enjoy it. To make sure you never miss an episode, subscribe to the show on iTunes or Stitcher, and sign up below so you get an email every time a new episode goes live.

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