After the Affluence

After the Affluence

Article posted in Values-Based on 9 March 2005| 4 comments
audience: National Publication | last updated: 18 May 2011


Scott Fithian is famous for rocking the boat ... in a good way. As an advisor to advisors, Scott challenges conventional paradigms of client/advisor relationships and has become a national mentor in the art of values-based planning. In "After the Affluence" Scott suggests that "In an industry driven to provide answers, what clients are craving most is a new way to question."

by Scott Fithian

For much of our nation's history, and most of our clients' lifetimes, people have followed a predictable path. A path set forth by the basic human survival instinct. First and foremost, our clients have worked hard to earn a living and protect their families. The edges of the path became a set of blinders as they devoured the road ahead. The emotions and thought processes that accompanied the journey filled many spaces in their conscious minds. During this phase, clients may have dreamt of and planned for financial independence, but didn't take the time -- or allow themselves the luxury -- to consider how life would unfold once independence was achieved.

As a result, our affluent and super affluent clients arrive at the point of financial independence longing for clarity and tasting introspection at greater depth than ever before. Where they once approached wealth as an end game, they now begin to grasp that it was simply a means to an end. Where they had anticipated that wealth would represent freedom, instead it now poses larger and more troublesome questions. What will replace the intensity with which they approached their careers or businesses? What will fill their days and stimulate their minds? What will they do with their excess wealth? How much is excess? How can they provide for their children and grandchildren yet protect them from the evils of affluence? Should they purchase a third or forth home, or allocate more to charity? And how will society react to the inherently visible decisions they're about to make?

Clients are wrestling with the most intense decisions of their lifetimes, and as advisors, we must prepare ourselves to facilitate their need to discern wise choices. Likewise we must possess a process for carefully, respectfully, and effectively taking these relationships to a point at which each client considers us a sounding board in this new and unexplored realm.

Parallel destinies

At the same time, most advisors have spent their careers focused on money as the object of their bounty; building assets under management and charging fees for planning services. Their business has a starting point and a finish line for each service rendered and each plan that's implemented. These become their own set of blinders that stand in the way of their ability to help clients get their arms around the emptiness and begin to fill it with a new life plan.

Advisors who wish to remain front and center in their best clients' lives, and to build more and more of these relationships each year, need to address a new planning paradigm. Many affluent clients are finding themselves without any remaining meaningful financial goals to work towards paired with a lifetime of wisdom and intellectual capital they want to share. They crave answers to the questions that their subconscious is posing. They yearn for a way to channel their financial resources in new and meaningful ways. They need you to prepare yourself to help them get there.

The challenge here is that advisors are trained to think rationally. We are taught to have a somewhat scientific relationship with our clients -- one that follows the tax code and laces itself through legal guidelines and creative design solutions. Though many clients confide in us, we don't get paid to dream big, brainstorm and simply listen for hours on end. Certainly, most of us who've reached the upper echelon of our professions have built deep and meaningful relationships. But what percentage of your time with your clients is spent helping them shape their non-financial future - the one that primarily occupies their minds?

When two worlds collide

Consider for a moment the dichotomy between the structure of an advisor's business and their clients' changing needs. Clients' attitudes center on wealth as a means to an end and not the end itself. However as advisors, our revenue streams are structured such that we get paid only when we complete a deliverable. Even when planning involves intimate conversations, our mindset and the dynamic we communicate to clients is that the fee covers the solution, the tangible plan. As a result, our business model surrounding money directly contradicts our clients' mindsets about their own wealth. To propel ourselves into the future at the same rate of success we've achieved in past decades, we must begin to develop a more symbiotic structure.

At this point, perhaps you're saying to yourself, "I'm ahead of the crowd. I already do this." Every one of us has intimate relationships with our best clients. We've seen business owners cry and heard spouses share secrets. We've heard heartfelt thank you's and received hugs drenched in sincerity. And we can continue to dwell on the 98% of things we're doing extremely well or we can search out new and better ways to fix the 2%. Ask yourself what got you to this point. Ask yourself what you want for the future.

The problem with the 60 minute meeting

"Just because you can't spot your client's current need to sort through these deeply personal and emotional issues
doesn't mean the need isn't there. Take a minute to list your 'A' Clients.
Then ask yourself, or better yet, ask your client, who is their sounding board?"

Many advisors suggest that their driven, wealthy clients won't sit still that long; that after the initial data gathering or planning sessions that may last several hours, the conversations and the players are more focused on getting the work done than on brainstorming about the options. We suggest that it's not the client, but the advisor who is perpetuating this dynamic. Most affluent people lack someone to really talk to; to confide in. If you perfect your ability to create an environment -- and a business structure -- in which they are free just to dream, a large percentage of type-A affluent drivers will embrace the opportunity. If you don't facilitate it, someone else will. And if you wait until this need reaches their conscious mind, they will have already had the conversation with another advisor.

A chance to differentiate

If you make your time together different than the interactions they have with any other advisor, they will make the time to be in your presence. Consider the times in your life when you've gone through a major transition. Think about the one person who was there to help you absorb the pain or perpetuate the excitement. Weren't you drawn to that individual?

Affluent clients need sounding boards. Without any meaningful financial goals ahead of them, that drive has been replaced by a tremendous void. They have more time for introspection than ever before. It is both invigorating and uncomfortable. Their newfound freedom feels like a prison. Where they once thought wealth would offer freedom, it instead poses more questions -- questions that carry greater complexity, weaving family, society and business into a tangled mess. An advisor's inability to truly grasp this phenomenon leaves clients meandering through this troublesome state alone. It is our job to figure out how to more intentionally, more frequently, and with greater skill lend a helping hand.

Lending leadership vs. rocking the boat

Certainly the thought of entering this arena with clients you don't automatically click with can be an uncomfortable proposition. Start slowly and simply begin to raise the issues. Test the water by posing future questions:

  • If you could clear your calendar for tomorrow and spend the entire day doing anything you wish, what would you do?
  • What one thing do you wish you had more time for?
  • What one thing would you like to never have to do again?

Affluent people are surrounded by limelight, but it seldom centers around their personal aspirations. Everyone wants to talk to them but few encourage them to think and dream big about their own non-financial vision for the future -- the rare conversation that has nothing to do with business or money.

The most difficult of all introspections - our own

As advisors we get paid for solutions. The point at which we get paid validates our value proposition. We must be doing something right if people keep writing checks. But what percentage of your A Clients considers you their primary sounding board? If it's less than 50%, consider the following:

  • How willing are you to reach outside your relationship-building comfort zone in order to better your clients' ultimate outcomes?
  • When was the last time you took the time to hone your technique for building client intimacy?
  • Is your compensation structure geared toward the type of assistance your clients need in this new wealth paradigm?
  • After the initial data gathering or discovery sessions have been conducted, how long is your typical meeting? How much opportunity for intimacy is there is just 60 minutes? What percentage of the meeting do you spend talking?
  • When was the last time a longstanding client told you something in confidence that they'd never told anyone before?

The things we know to be true

At some point in life, everyone contemplates life's greater meaning. It's a function of being human -- of the sociological make up of our conscious minds and our care for others. For some the questions tap them on the shoulder daily. For others, their senses have become deadened by the routine pursuit of their financial successes. Once we spend a little less time designing financial plans, and a little more time helping clients identify the underlying questions, we'll find out where they really are in life, and what they want most from us, their most trusted advisors.

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Different Perspective on Wealthy Clients

With all due respect to the author of this article, I have rarely found clients who have obtained significant wealth to be very indecisive on the use of their affluence. I guess the author must have a whole different set of clients than I have experienced. #1 Wealthy clients transition and have experiences over the period they build their wealth to gain significant insight into their philosophies toward money and other matters. #2 Clients who achieve their own substantial wealth usually have the attribute of decision making and well grounded approaches to most major life decisions. Wealthy people who accumulate their own wealth generally are not "naval gazers". I have not found them soliciting my opinion as to their life philosophy on wealth distribution. #3 My clients are paying me to sort out technical facts, investment decisions, tax consequences, estate planning and interpretation of legal instruments. Most of my clients would resent paying my company that I work for a fee for something they prefer discussing with their close friends and relatives. I think the thesis of this article has merit if the client is truly searching for some truths or meanings; however, my experience has been that might be 1% of all affluent individuals. Monte L. Schatz, J.D. Centennial Bank Trust and Asset Management Omaha, NE #3

High net worth clients

While establishing the "counselling oriented" relationship that Scott Fithian's article addresses is much easier with some high net worth clients than with others, ultimately, the responsibility for the relationship must reside with the advisor. My experience is that I am much more valuable to my high net worth, and very high net worth, clients when I am a counsellor than when I am merely a draftsman, or when I offer mere technical advice. Being a counsellor to my clients means learning as much as I can about my clients and their families, and talking with them about personal, non-tax issues. (My experience is that "it's never about the money." It's always about protecting loved ones.) That takes time and effort by the advisor and brings into question the idea of hourly fees vs. fixed fee, value based billing. Perhaps needless to say, many clients resent being asked to pay an hourly fee for the time spent on what might be perceived as wasteful conversation. But, in a fixed fee scenario, I've not received complaints from clients because we "spend too much time" merely talking about the clients, their families and loved ones, and their personal, non-financial goals.

The Choice is Yours

The relationship between advisors and wealth holders exists on a continuum from product provider to key technical advisor to most trusted confident on all major life decisions. The place an advisor takes on the continuum is a choice that is all their own. It is impacted by the vantage points of both the wealth holder and the advisor. If one wishes to move along the continuum in one direction or another, it can warrant a bit of introspection and preparedness. Ultimately, we never know for sure until we ask.

Scott Fithian's Article

I'm an attorney and a nonprofit consultant in Colorado. One of the many services I offer to clients is Philanthropic Advising. My DIRECT CLIENT is not the donor. My direct client(s)are the nonprofit organizations and foundations who pays me for the time and advice I give to THEIR donors and their prospective donors. I find in Colorado that many nonprofits and foundations simply don't have highly-trained staff to help donors explore their philanthropic options more fully. Before working with the nonprofit/foundation donors, I disclose to donors, in writing, how I am paid. I do not share "educational illustrations" with donors, such as how the mechanics of various charitable gift tools. I also do not draft any documents. My role is simply limited to advising. I feel like a psychiatrist at times. I am paid to listen, more than talk. I sometimes ask a lot of questions and sometimes I ask only a few because the donor clearly wants to talk and be center stage with their thoughts. If I do ask questions, the questions generally center on what the donor is trying to accomplish, have they enjoyed their past philanthropic experiences - what they have enjoyed, what they haven't enjoyed, and what their expectations and desires might be in the future. In other words, their STRATEGIC THINKING about philanthropy. When a donor leaves a meeting, the donor often say "I just needed to think out loud and you have allowed me to do just that. Thanks for the insight." It's their insight, not mine. Janet Doolin, J.D. Doolin Cousulting Denver Colorado 303.694.2603

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