This fall was a memorable time in the Halverson household. Our eldest, Colin, left for college and we tried not to get too emotional. We all know that is easier said than done. I was nervous about him going, but I’m also proud of him and to a smaller extent me and my wife. Colin came into our lives 16 years ago and we have never been the same. Thankfully we have been saving for his college education since that day. In those 16 years there have been up markets and down markets, but in the end it all worked out.
What I have learned from this process is that the reason we invest is not to beat benchmarks; we invest to make dreams come true. Seeing Colin go to college was one of my biggest dreams. So what can advisors do to make clients think more about their dreams and not benchmarks? Let’s look at what DREAMS are made of … (hat tip to Van Halen)
Develop a plan
Reinforce the plan annually
Elect the right investments
Adjust if necessary
Memorialize along the way
Seize the moment
Develop a plan
The older I get, the more I believe the most important thing advisors can do for their clients is create a solid financial plan. The investments you select should just be what you use to implement the plan. Very few clients understand the differences between investment solutions. Once there is a solid plan in place the whole relationship with the client becomes deeper. Remember, the investment providers you choose are just the tools you are using to implement the plan. If you are wondering how you start to put a great plan together—we can help. We have a set of discovery cards you can use to figure out which dreams are important to your clients.
Reinforce the plan annually
A financial plan only works if it is a living document. Many times advisors develop a plan with clients and then never look at it again. That does not work. A financial plan is a touchstone for the client-advisor relationship. Advisors need to review the plan annually with clients, because things change. I wanted to be a professional golfer at one time in my life, but things change. People’s circumstances change, so update the plan accordingly.
Elect the right investments
Just because you know your client’s goals and you have developed a plan does not mean you are done. You must then elect the investments that help make that plan come to life. Everyone gets into the weeds when talking about investments. Investments—mutual funds, exchange-traded funds, securities and so on—are just tools. Think of a wrench, a screwdriver or a hammer. Each of those tools is used for a specific purpose. You would never use a wrench to tighten a screw. Similarly, you should not use a one-size-fits-all approach to picking investments. We at Russell Investments believe investments are chosen for their ability to implement the plan a client has agreed to. And through our Separately Managed Accounts and Personalized Managed Accounts program, we can customize a portfolio to fit their unique needs, goals and circumstances.
Adjust if necessary
The past few years have been extremely challenging. I frequently get calls from advisors asking if they should be moving their investments around in this challenging time. I think the answer to that question is: it depends. If a client’s situation changes, then different investments may be warranted, but that is not always the case. “A decision not to do something is still a decision” is one of my favorite quotes ever. The problem with making changes is that doing so can throw more uncertainty and volatility into a client’s life.
Sometimes a client’s financial situation changes, and you need to adjust. This speaks to the value of ongoing client reviews and deep discovery conversations. Knowing when to adjust a plan may require asking the right questions to uncover some of the changes that have taken place in a client’s life. Unsure of the questions to ask? We can help.
Memorialize along the way
This is a topic I address with advisors all the time. If an investor has a memorable event occur in their life, stop and memorialize the moment. Money is entrusted to us for a reason. It helps your client’s dreams come true, so we should stop and smell the roses with them. If it is a graduation, birth of a child or a retirement we should enjoy these events with our clients. Yes, the end destination matters, but the journey is pretty good as well.
Seize the moment
You have all probably heard this quote: The best time to plant a tree was 15 years ago. The second-best time is today. Dreams must be given the right amount of attention and time to be fulfilled. Everyone sees how good the U.S. soccer team is now, but no one has seen the work every one of those players has put in since childhood. If you have clients who have dreams, help them seize the moment by putting a plan together to achieve them.
If you are already starting to think about New Year’s resolutions, I have one for you. Make sure you know all your clients’ dreams and help them commit to put in the work to making them come true.
© Russell Investments
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