September 29, 2020

The return on life – the new paradigm for advisors

Suresh Sadagopan

CEO, Ladder7 Wealth Planners Pvt. Ltd.

Life is what we make it to be – it is really in our hands. In some cases, it is a true roller coaster ride. Many times, the events overtake us and we have no option but to pick up the pieces and move on. That is easier said than done though.

Preeti would agree to that. She has experienced the tumultuous ride firsthand. She, along with her husband Vishal had made big plans. They wanted to buy a bigger home. They had great plans for their children.  And there were so many other goals they had over & above this. The problem was there was not that much money to go around!

An advisor has a major role to play in understanding the client’s motivations and aspirations, tempering that with a reality check, helping them to prioritize and reframe the important things in their life. A good advisor would assist the client with a clear life plan that works for them. Once the life plan is framed, finances are just a way to make that plan come to life.

The best laid plans can however go haywire due to seismic shifts that can happen in one’s life. That is when the mettle of an advisor gets tested.

We need to understand that planning is important though even the best plans may not go along intended lines. A good plan will have security nets in place & would have amounts earmarked for contingencies. While the catastrophe that may strike one may be unavoidable, an advisor certainly can cushion the fall and help the client’s family in their hour of crisis.

Preeti suffered a crisis like that. She lost Vishal to an accident. The tumult that followed in its wake was gargantuan. Preeti was heartbroken. She was retreating into a shell; her condition was such that she was just willing to exist for the sake of her children. It was touch and go and it was possible she would get into depression.

Such traumatic transitions are always a minefield for an advisor. However, we have a major role to play in such situations. Clients caught in such situations lose their sense of proportion and react in a kneejerk fashion, caught in the emotional plasma-field that blinds them & makes them take rash actions.

In Preeti’s case, she resigned herself to her fate. She wanted me, her adviser, to take all decisions. It was then, that I had to play the role of a friend, philosopher & guide to the hilt.

I told her, “Preeti this is your life. You have your children to take care. They look up to you for direction & guidance. You are now their father and mother. You have a duty towards these children, whom you have brought into this world, whom you love so much and who are your world. Such resignation and aloofness on your part would cause incalculable harm to them.”

“You have to pull yourself together. What has happened is an unexpected calamity.  But you will now need to get past these treacherous waters. In life, there are ups and downs. We cannot throw in the towel when we hit a rough patch in life. We need to see what we can learn from that and move on. Such experiences are great teachers. It’s only that we need to be willing students to learn our lessons.

Meet life head on Preeti!  Let history not judge you as someone who was fragile & never recovered after a calamity. Allow yourselves to feel proud that you can bounce back and live life with renewed vigour & be a beacon to your children and others”, I concluded.

It had that salutary effect on Preeti. She perked up and assured me that she will straighten up & move forward for her children’s sake and for her own sake too.

It is thought that financial advisors are just money managers, number crunchers & help with investments. Even some of us believe that we are nothing more than this and end up having a transactional relationship with our clients. In such a milieu, we end up talking about investments and markets and the clients focus on just returns to the exclusion of all others.

What we miss in the process is – Life, the client’s life.

When we take responsibility of a family’s finances, we are managing their aspirations, their dreams, their future. We need to build a roadmap to achieve the milestones in a predictable fashion. We need to manage the client’s emotions and behaviour and nudge them in the right direction. Clients may not think much about our role here.

A Morningstar survey conducted a couple of years back, shows that where advisors think managing client’s behaviour is important, the clients themselves have other things like returns which they rate highly and put  behaviour management by advisors way below on the list. But, we need to do it in the client’s best interests. Clients will eventually understand who is truly interested in them and acts in their best interests. This is what helps the advisor to own the client.

Preeti & others need us. Are we advisors keen on engaging deeply with our clients?

You will find Preeti’s story in all its glorious detail in the book I have written called – If God was your Financial Planner. You will find various transitions happening in the lives of Bala, Anshuman, Raj and others and how an advisor handles this.

As a bonus, there is a gripping story in this book, which I hope will keep you at it till the end. The book is currently available on Amazon (https://amzn.to/331Z9Xg) & Flipkart (https://rb.gy/aw7uky). Trust this will be a useful resource for our advisors. Please do let me know your feedback