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Why Financial Advisors Should be More Proactive

By: Ronda Payne

Published On: January 24, 2019

Into every life a little rain must fall and nine times out of ten, that means there is a financial aspect to the concern or milestone. It happens to everyone. A lost job, relationship breakup, mental or physical illness, taking care of aging parents, all kinds of things happen that impact an individual’s financial well being. It isn’t just the challenging events either. Receiving a large financial gift, planning a wedding or buying a business can all be great life transitions, but ones that will have an impact on investment plans and strategies.

Financial planners need to position themselves as helpers not just for when the road is paved with gold, but also when it’s rutted and difficult to walk. It’s time for planners and advisors to take a proactive approach in working with their clients in order to set them up to handle some of life’s adversity without destroying their personal financial management plan. After all, as a partner in clients’ financial well  being, ensuring they are set up for all kinds of possibilities is an important element.

What is financial planning, traditionally?

Unfortunately, most financial advisors are geared to work around only a few expected milestones – buying a home, getting married, kids’ education savings, retirement planning and estate planning – not the less definite ones, or ones that don’t necessarily have products aligned to them. Yet these are the issues where finances can go awry and true financial planning from a certified financial planner can help if that advisor makes a commitment to helping people create financial security in all aspects of life.

It is during transitions like losing a parent and inheriting money, having an adult child move back home due to a lost job or going through a divorce, when clients need the most help with their wealth management because they will most likely be living in the emotional side of things rather than the logical or financial management side. This is a double-edged sword. Financial advisors and planners are focused on dollars and cents, they aren’t necessarily looking at the various life transitions that may occur, but they need to. Ultimately, no matter how a client feels when they look at their annual statement, having a certified financial planner isn’t just about the number at the bottom of the sheet, it’s also about understanding what is needed along the way and mitigating risks to ensure many dreams can be realized even if some rain does fall.

The importance of understanding a client’s life

This is why a unique and personalized relationship must be established between a certified financial planner and each client. According to Mitch Anthony in an online article called Prepare or Repair on Financial Advisor, his organizations have been collecting data on the life transitions faced by financial advisors’ clients. Among the two decades worth of data, the most frequently noted transition of concern to clients was aging parents. These clients are the so-called sandwich generation dealing with both the needs of parents and children.

The issue isn’t new and a wide range of businesses have cropped up to help meet the needs of aging parents: driving services, homecare services and retirement living complexes are just a few of the options available to help create more time for families to be families and not caregivers and patients or clients.

Whether it’s aging parents, a failed business or a windfall from the lottery, a certified financial planner need to take the time to walk clients through the timeline of their life and the potential milestones or changes along the way. This is going to be a lengthy meeting and brings about the importance of clients choosing a financial advisor they like and are comfortable with. All potential transitions must be looked at from a financial point of view to understand the possible ways to manage them.

Mitch Anthony created a tool to facilitate this kind of discussion that he calls $Lifeline. While there’s no doubt that this tool would be effective, a savvy financial planner can likely establish their own way of walking clients through the process.

An illustration of life’s timelines

Consider financial advisor, Marie, and her clients Dave and Rachel. Dave and Rachel are in their 30s, have two boys aged 3 and 5, own a townhome and both work full time.

Marie should begin the conversation by asking Dave and Rachel about their dreams for the future, what they would like to do in retirement and how they see their life progressing. She should also explain to them that while some life transitions are expected and anticipated, others are not and all have financial implications.

At this point, Marie can start moving through a timeline with Dave and Rachel, asking about their kids’ education, whether they would like to sell the townhouse and move to a larger home and other life elements. Once that rapport and the “usual” questions are explored, it’s time for Marie to get into the more challenging issues. She can ask about Dave and Rachel’s parents’ health, what their parents are like, how they anticipate the aging process to look and whether aging “in place” is important.

Will Dave and Rachel need to consider buying a home that accommodates one set of parents? Or a single parent if one passes away? Will they be expected to pay for parts of their boys’ weddings or home purchases? Dave works for a union, what if there is a strike and he is being paid only strike pay instead of his usual wage? What if Rachel’s role at a legal firm is expanded and she gets a large raise? What if one of the boys were ill or injured and needed constant care? How would the finances look if their marriage failed now, 10 years from now or 20 years from now? What would they do with a financial windfall?

These are the hard questions, and ones that may be uncomfortable for clients, but will allow them to see the “big picture” of what can happen in life and what the financial implications can be.

Trust is the biggest element here. By establishing trust and comfort with clients, a financial advisor will be better able to walk them through the traditional milestones as well as the life shifts that can often send things sideways, thereby becoming much more of an ally than ever before.


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