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5 Benefits of Adding Investment Education into Your Financial Planning Process

Posted by Anne Laffin on September 17, 2018

Clients value your ability to explain how their investments impact their financial goals. You are a coach, a hand holder, a truth teller, and realist.  Helping a client realize their financial dreams goes far beyond dollars and cents and a sound investment philosophy.  It requires trust, honesty, and communication much like all relationships.  But building relationships takes time and trust can be hard to come by.  Adding investment education into your financial planning process is one of the easiest ways to build trust and rapport with your clients.

Here are five benefits to adding investment education into your financial planning process.

  1. Build trust and long-term relationships.
    • How do you show a client that you are invested in them? Take the time up front to build a relationship. When your clients realize that you are investing as much with them as they are with you, trust begins to form and a long term relationship is built. Client relationships need to be nurtured. Taking the time to educate your clients on simple (and not so simple) investment terminologies and philosophies demonstrates that you want them to be engaged in the planning process, that you are in it for the long haul, and that they should be too.

  2. More proactive conversations and meetings.
    • No one wants to take part in a one-sided conversation, including your clients. When you educate your clients, you encourage them to take a more active role in their financial future.  Your meetings will become more productive because your clients arrive informed and prepared.  Plus, they will have a better understanding about why you are making your recommendations.  Ultimately, you will spend less time explaining and justifying and more time finding ways for your clients to realize their goals.

  3. Better understanding of expectations.
    • Do your clients really understand their current portfolio allocation?  Do they know what their risk tolerance is and what it means for their financial future? If the answer is no, setting realistic expectations is going to be a challenge.

      It can be hard to set realistic expectations with a client when they don't have a firm grasp on their financial plan.  Maybe your client thinks they have a conservative portfolio when in reality, they are sitting in an aggressive allocation.  An informed client understands how the ebbs and flows of financial markets impact the planning process. Educating your clients early on allows you to set and manage expectations so when things don't go exactly as planned, your clients are already prepared. 
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  4. More confidence in planning and strategy.
    • Knowledge and confidence seem to go hand in hand.  Providing your clients with the knowledge of what you are doing and why gives them the gift of confidence. Confidence in your abilities, confidence in the plan you have put in place, and confidence that they have chosen the right advisor or planner to manage their money.  

  5. Better investment behavior.
    • How many times have you made a decision you regretted because you were scared, uninformed, or angry?  Clients are no different.  At some point, they will want to make decisions based on emotions rather than fact.   Improve your chances for more rational, informed client behavior by providing them with the tools they need to be an educated investor. If you do, the trust will be there when hard decisions have to be made. 

A little goes a long way

Taking the time to educate your clients will pay dividends in the long run. You will see more efficient client meetings, more engaged and prepared clients, and maybe some extra time to spend working on your business.  Using financial planning tools like RightCapital can assist in the education process.  Our easy to understand visuals and graphs help you show clients 'where they are', and where they need to go in order to achieve financial success.

 

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Topics: Financial Planning

Written by Anne Laffin