I’ve probably heard this said more times than I can even remember. I’ve also heard this one: “No one has ever asked me that before.” So I think their origins came from salespeople telling other people the things they want them to hear while trying to avoid any uncomfortable conversations.
One of the things my dad, Jim Meredith, has always said that has stuck with me the longest is our promise to our clients: “We are going to tell you the things you need to hear, and those may also be things that you might not want to hear.” That spurred “I’ve never heard that before” from clients, which simply means we can’t and won’t dance around the uncomfortable issues.
Sure. The Truth Might Sting a Bit
If you are not on track for retirement, if you’re not saving enough, and if you’re not invested in the right areas, you need to know that. We are in the position to tell you that, and we need to tell you that.
“No one has ever asked me that before,” comes from people in our industry who only focus on investments. When we use MASTERPLAN®, we focus on the big picture and must ask people a lot of questions. We ask them about scenarios that we’ve heard multiple times in almost every conversation we have with a new client. Granted, it can be uncomfortable and we understand that.
We ask, “What happens if you die or your spouse dies?” And “If you die, what part of your pension does your spouse get – if anything?” And then there is, “If your spouse dies, what do you need to live on?” Even more basic, “If you were to retire tomorrow, how much money would you need to live on?” With a lot of these, the answer is: “No one has ever asked me that before, so I am not really sure.” This is when it becomes the focus of the conversation.
While everyone in our industry wants to focus on investments, we understand that there are a lot of bigger questions that need to be answered before we talk about risk tolerance and specific investments. It’s because the answers to some of those hard questions lead to answers about where you should be invested, how much you have in stocks, bonds, cash, how much you need in income and what your “hurdle” rate is – another question that others often don’t ask.
Your hurdle rate is based on this: to reach your financial goals and do the things you want to do in the future, how much will you need to earn on your money today to do the things you need to do tomorrow? Sure, you might want to earn this much, but that’s not the answer to the question, is it? The question is, “How much do you need to earn?” “How much must you earn?” And that’s what we answer through MASTERPLAN®.
We Should Be Thinking About These Things
We don’t know what we don’t know. Sometimes, the questions we should be asking ourselves we’ve never faced before. We tell clients they’ve only retired once; we’ve retired hundreds of times. You learn from the good outcomes and the bad outcomes, from the exciting outcomes to the not-so-exciting outcomes. We’ve learned from each one of those experiences. Consequently, people should think about and know what questions they should be asking.
And then, there are hard questions and hard answers that people don’t like to face. We all know we should have a budget. It’s hard to do and we avoid it. We also don’t like to talk about sickness, death or divorce, money or debt – all the things we try to address in MASTERPLAN®.
Unquestionably, we have clients that are reluctant to answer. They hold their cards close to their chest, so to speak, and that can make our job very difficult. We’ll have people say, “I don’t want to talk about that. Just tell me what mutual fund to buy.” There are times when we have to admit to clients that we’re probably not a good fit for them. Clients we’ve had for decades understand that the advice they receive is only as good as the information provided. We change as they change. We go through life together.
For those who only want a shallow, non-personal, investment-focused relationship, we’re definitely not the right fit for them. But for those who stare into the unknown searching for answers about the future, I tell them the future is a dark room and I try to start turning lights on.
At first, we may try to turn a light on and we may hate the furniture or the wallpaper, so if we can turn that light on soon enough, we have got time to change those things. If we wait too long, we may not be able to change what’s in the room, but that’s also important to know what the future looks like so that we can deal with it today.
It Comes Down to Trust
Trust is a big part of it. And through our processes in doing this for more than 70 years, we hope that clients do trust the process (and us) and understand that we’re here for them. We want to be successful with them.
I feel it is important to establish that trust, and to explain to clients up front what we’re going to do with their information. Obviously, we have to make copies of legal documents, credit card statements and 401(k) statements. And, again, people say they’ve never shared this information with anyone before. So it is like going to the doctor for the first time and dealing with more than what you are comfortable with, but for your own good.
Quite frequently, after the MASTERPLAN® process, people will say, “I wish I had met you a decade ago.” On one hand, it’s frustrating because we would have also loved to have that conversation a decade ago. We could have made some big changes. But on the other hand, it’s also very flattering to us. The process works. We know it. And we know we are adding value.
What also helps in the process is for both spouses to be present. It’s not unusual for me to only have the husband be present at the first meeting. Then, when we meet together with the spouse, she’ll look at her husband and say, “Wait. Why did you say that?” or, “No, this is wrong.”
It is always important to have everyone involved from the start. Sometimes, couples get into arguments in the meeting. Sometimes, people cry. While it is terribly uncomfortable, it is also why we need to tell our clients what they need to hear and not what they want to hear.