Blog Post | Know your client…better

The regulatory concept of KYC is defined as a standard used in the investment and financial services industries. It is often defined as a way to verify customers and know their risk and financial profiles.

In the world of lifestyle financial planning, the idea is to know your client…better! When we start asking questions such as ‘How responsible is this client with their money?’; ‘Can I influence my clients behaviour?’; ‘What will make them deviate from the strategy?’, and ‘How do they make decisions?’, we can not only provide better suitable advice but also better personalised financial advice.

While many advisors aren’t trained as life planners, psychologists, money coaches, or life coaches, the role of a financial advisor can often overlap with the fields of psychology and coaching.

Many advisors consider lifestyle financial planning or life-centred planning as a new-age and alternative planning philosophy and often seem reluctant to make changes to their current strategy. After all, if you’ve built a successful business on traditional financial advice principles, the question can be: What value will this new and exciting way of planning hold for my business and my client base? While this is a valid question, what we’ve found is that even the most traditional advisors or planners already subconsciously use elements of coaching and client discovery.

Think for a moment about your current client discovery process. Typically, you already ask your client certain questions about their life. Compliance requires us nowadays to ask even more questions to establish the source of funds, for example. Selling life insurance policies also requires a fair amount of client discovery.

In addition to understanding your client's risk tolerance, it is also important to understand their decision-making process. Do they make decisions quickly, or do they prefer to take their time? Are they easily influenced by market news, or do they take a more long-term view of their investments? Understanding these factors can help you tailor your approach to their specific needs and preferences.

Ultimately, the key to providing effective financial advice is to understand your client's mindset about money and investments. When focusing on client discovery, you can provide personalised and effective financial advice that helps your clients achieve their goals and improve their overall financial well-being. In most instances, you as a financial advisor will also do right according to compliance, regulation, and the law, when making use of a proper client discovery process.

Knowing your client better can also lead to finding ways to influence them. Imagine being able to influence your clients financial behaviour in a way that will lead to positive outcomes. This requires a shift towards a more holistic approach to financial planning and one where you incorporate financial and life coaching skills when engaging with clients.

The art of life planning seems to be that you can, through a process, help people focus on their true values and motivations, which ultimately determine their goals and objectives. Using these values, motivations, goals, and objectives, life planning provides a framework for making choices and decisions in life that have both financial and non-financial implications or consequences. Once we’ve considered our own mindset, we can more easily adapt the skills needed to improve our client discovery process:

Mindset Model

The very basic steps in client discovery are the questions we ask and the listening skills we adapt.

(Click on the highlighted words to download templates)

The goal of client discovery is therefore to assist the client in discovering what they really want from their financial plan. Now you and your client can collaborate on this new investment plan. A collaborative plan will in most instances see a client stick to the strategy as they feel it is not just a one-size-fits-all investment proposal you prepared for them. And while the client sees this as adding value, you as the advisor can be sure that the advice you offered is more suitable for your client.

View our recent webinars where we discuss these topics.

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