This week we interviewed Steve Cordasco, founder of Cordasco Financial Network, a wealth planning and investment management firm based in Philadelphia, Pa. Cordasco recalls a time he helped a client by addressing the emotional need underneath a technical question.
Clients often come to me with a question about investment performance. Over the years, I’ve learned that their real issue often involves something much deeper and more personal than portfolio returns.
Not long ago, I met with a client whose husband had recently died. Before her husband passed away, he had been the one who handled most of their finances. He had always been very focused on market performance and returns.
After his death, I developed a much closer working relationship with his widow.
One day, she reached out to me with a simple question: Could she afford to give her daughter a $50,000 gift without derailing her retirement plan?
I ran some projections and determined that if she continued to contribute to her retirement savings at the regular rate she’d be fine.
It’s possible I could’ve simply given her that purely technical answer to her question and she may well have been satisfied. But I decided to dig into things a little bit more.
The next time we met I asked her why she was planning on giving the money to her daughter. It turned out that my client was hoping to help her daughter put a down payment on a nearby home.
At the same time, though, I knew my client had been thinking about downsizing and moving out of her own home. I explored the issue some more and learned that my client wanted to ensure that she could spend as much time as possible with her grandchild.
The main reason she hadn’t yet taken steps to sell her house was because she was worried she’d have to move further away from her daughter’s family.
All these family dynamics gave me more perspective on my client’s financial and emotional situation.
I asked her whether she had ever considered selling her house to her daughter. If she shared her home with her daughter’s family she could see her grandchild regularly and also provide much needed childcare for the family.
Her daughter could own a house she liked in a desirable neighborhood and my client could invest the money from the sale in her retirement fund.
My client brightened up immediately.
She hadn’t considered this possibility before. After discussing it with her daughter, they decided to proceed with this plan. It turned out to be a win-win situation for everyone.
It can be tempting for advisors to give their clients purely technical answers to their problems: Yes, you can afford to take this trip, or give this money away, or buy this house. However, when we don’t dig into the deeper issues, we’re doing our clients a disservice.
When a client presents me with a problem or a question, I just keep asking why. Eventually, I learn more about the heart of the issue.
Maybe a client is afraid of running out of money because they want to make sure they have enough to provide for a struggling family member. Or maybe a client wants to invest in a get-rich-quick scheme because they hate their job and want to find a way out as quickly as possible.
When you dig deep into the emotional motivations behind a financial concern, you’re much more likely to end up with the right solution.
You’re not just addressing the surface issue, you’re finding out what the real problem underneath it is, and dealing with that instead.
This article was written by R.A. Monroe and originally published by Financial Advisor IQ.
View the original article by clicking this link: http://financialadvisoriq.com/c/1301893/144823