“If you don’t know where you are going, any road will get you there. ”
— Lewis Carroll
At Assured Support, we review a lot of advice from a range of advisers and variety of businesses. It’s a complex industry in some respects, but a simple one in others. One thing I’ve noticed, is that what often separates great advice from poor advice is the skill of the adviser in identifying their clients’ needs and objectives.
The worst advisers assume too much, ignore implicit needs in favour of explicit ones and fail to differentiate between their clients’ goals and their clients’ objectives. Confusing goals and objectives is such a basic failure but also one that’s simple to address.
Let’s start with why you needs to bother differentiating goals and objectives anyway.
It’s L-A-W, Law. Section 761 of the Corporations Act defines ‘relevant personal circumstances’ “in relation to advice provided or to be provided to a person in relation to a matter, [as] the person’s objectives, financial situation and needs as would reasonably be considered to be relevant to the advice.”
“I don’t belong here”
Your client’s goals and objectives are the foundation on which personal advice is built. Unfortunately, they are too often confused, used incorrectly or relegated in importance behind a client’s risk profile. In other cases, they’re reduced to generic and undifferentiated statements that lack detail and the reflect the planner’s recollection rather than the client’s relevant personal circumstances. Practically, the most powerful statement of your clients’ goals and objectives are the ones that come from the clients and are recorded in as close to their own words as possible. After all, isn’t the fundamental purpose of personal advice to deliver what the client needs and wants?
Most advice professionals can easily uncover their client’s goals and objectives. An effective discovery process is premised on identifying what drives the client and what will satisfy those identified needs. In my experience, this is often second nature for most advisers, but they often encounter difficulty when they try to demonstrate how thy have provided advice that is appropriate and suitable and complies with the law. Other advisers clearly and effectively represent the clients’ goals and objectives in the advice document but recommend strategies and products that seem to entirely disregard wants and needs they do effectively identified. Other advisers don’t even seem to appreciate that this information is critical to the advice that underpins their assessment of the benefits, consequences and implications of product replacement and the alternate strategies likely to satisfy their objectives.
Goals and objectives are different and distinct. An easy way to differentiate between them is to recognise the Goal as the destination, desired outcome or the end game. A goal:
- Provides the bigger picture, and does not usually contain a high level of detail;
- Must be achievable and capable of being shown as achieved (by either qualitative or quantitative measures);
- Is contextual, objective and subjective;
- Creates the need for forward direction and a plan;
- Is identified by your client; and
- Can be emotional, inconsistent and lacking clear priority.
Remember that most clients have multiple goals that they hope can be pursued simultaneously.
For example, buying a house or retiring with $1,000,000 in superannuation are both goals. However, not all your clients may be able to effectively pursue both of these goals at the same time.
The Objectives are the steps, tactics or road map that will be followed to achieve the Goal(s). They:
- Outline individual steps to be taken;
- Contain a higher level of detail;
- Are successive or progressive measures;
- Should be specific, measurable and achievable; and
- Are relevant to the identified goal.
If the goal is clearly understood, the objectives are the means by which the client is more likely to achieve that goal.
Reconciling goals and objectives
Effective discovery processes are structured and consistent but, in reality, your questions and your approach will change according to your clients’ engagement in the process. Likewise, the way in which you frame your enquiries will also impact the value of the response you receive.
Asking a client how much savings they have in the bank, or how much money they’d need saved to be comfortable elicit very different responses and channel your recommendations in different directions. It may come down to a certain figure, or it may come down to a time frame. For example, 3 months’ worth of current salary may be what your client needs to feel comfortable.
It’s a ‘discovery’ process because few clients have specific goals, fewer clients have clear, structured and prioritised goals and most simply have an intuition (or an apprehension) that they’re not heading in the right direction. In my experience, it’s important to understand how many clients can’t articulate goals beyond the need for certainty and reassurance. Empathetic discovery both helps you to identify their goals and your clients to articulate and embrace them. Asking why the client has come to see you, or asking what they want to achieve in the big picture will usually elicit a response that is in line with their ‘big picture’.
Imagination and the thrill of discovery
Research shows us that we are quite bad at imagining our future. Our brain physically changes the way it operates when we do so, and we start to become disconnected from ourselves and almost a stranger. If this is in fact the case, how is your client going to know what this person wants, let alone what else will change between now and then? It is no wonder that your client may become somewhat nervous when confronted with this level of uncertainty coupled with a desire to reach a goal they cannot wholly express.
“I want to make sure that I have enough for retirement”, or “I want to be able to pay my bills if I can’t work”, or “I want to go on a holiday”, are all very reasonable things that your client may want, although by themselves are not enough to start taking steps to accomplish any of them.
Identifying and discussing your clients’ goal(s) helps them to determine, or refine the strategy by which they are likely to achieve these goals. I tell advisers that any recommended objectives that aren’t tied to defined and prioritised goals are guesses that are unlikely to protect you from the inevitable complaints. I tell them to take time and test their clients’ goals to ensure they understand not only what they’ve been told but identified the goals (and reasons) that the client may be unable or unwilling to declare. Demonstrate empathy and interest but use gently interrogative questions. Start with the what, when, where, why and how much, and use the responses to design the parameters and measures that are critical to great advice. Your clients’ answers to these questions provide the basis for the objectives.
A practical example: Discussing ‘the holiday’
Sure, it’s an under-rated modern classic but that’s not what I want to talk about here (DM me to discuss).
Instead, I wan’t to take a moment and use a simple example to model a practical response to better identifying a client’s goals (and the objectives needed to achieve that goal). I know your (non-actuarial) clients don’t often express themselves in such a direct, transactional and Schwarzeneggerian way but let’s run with it for convenience. Let’s explore how to react to your clients’ goal to go on an overseas holiday and tease out their objectives.
What – “We want to go on a holiday”
When – “July 2019”
Where – “China. We’ve always wanted to see the Great Wall (and Pandas).”
Why – “It has always fascinated us, and I know we will enjoy the history and culture aspects of the country. It has also been quite some time since we have been overseas, and I want to treat my partner and myself now that we have the time”
How much – “$10,000”
Limitations – “We don’t want to go into debt to achieve this, and we are prepared to forgo some things if needed.
The original goal (holiday) now has structure, measurements and defining characteristics applied to it. We now know the time-frame, destination, reason, cost and what the client is willing, or not willing to do to get there.
From this point the objectives can take shape, and you can form the steps to achieve the goal. If the client was asked if their objective was achieved and they can answer yes or no, then you’re on your way.
By testing the goal, and your clients’ explicit and implicit needs, you can reframe their vague aspiration to a clear goal and one that supports clear and specific objectives. Their goal is now best expressed as “we want to save $10,000 by July 2019 for an overseas holiday to China”
Now we have an objective that is:
- In the client’s own words
Ask, and ye shall receive (clarity)
You may not use all the information from the discussions, but the objective itself is clear and defined. What you have done is provide guidance and assistance to your client in making some clear and pro-active decisions regarding areas of their life where they may not have had any level of certainty or clarity prior to meeting with you.
In my experience it is always best to ask more questions and keep checking back in with the client while you’re recording their goals.
If their goals are properly identified and prioritised, the objectives will be clear and obvious. If both goals and objectives are well understood and properly recorded, your recommendation will be clearer, less generic and, more-importantly, better.