Key Takeaways
Details are so important when it comes to personal finance. Not every client has the same relationship with money—even many spouses differ. Investing is just the start.
Deeply personal client relationships aren’t “scalable.”
Software, algorithms, and slick marketing can’t mask an advisor’s inexperience and lack of knowledge at large financial institutions.
If you don’t feel like your advisor knows you and your family well, you owe it to yourself to find one who will.
Details are so important when it comes to personal finance and client relationships. So many people just think that financial planning is just about investing your money and paying off your mortgage. But it’s so much more complex. We touch on the emotional nuances of money as well as tax mitigation, wealth protection, estate planning, wealth transfer and often exiting one’s business or career.
A software provider contacted me recently about a client relationship management solution that would help me remember important details about clients and automatically send them “personalized” messages to make it appear that I knew them.
This irked me for several reasons. First, the vendor pretended to be a prospective client to get on my calendar. Then I started receiving promotional emails about his product without my permission. I was extremely turned off by these hard-sell tactics. Further, it bothered me that there could be a need in the marketplace for advisors to pretend to know their clients better. Maybe there’s a need for tools like this at large financial institutions in which each “advisor” might be serving 500 clients or more – about 10 times the number of clients each of our professionals work with. But we certainly don’t need it.
I was thinking about that encounter the other day, when another (human) planner and I spent two very productive and enjoyable hours speaking with a couple we work with. We were able to get updates about the truly important issues and developments in their lives and help them work through several planning roadblocks as we got to know them even better than before. As a fee-only comprehensive wealth advisor, we don’t have to worry about selling products or making our services “scalable.” Every client’s situation is unique, and each has a different relationship with money. You can’t use a template or cookie-cutter approach to help them make the best possible financial decisions. One client may have difficulty making decisions around estate planning, whereas another needs continual reassurance that they are not going to run out of money, even if they have enough for five lifetimes. As I’ve written before, married couples often have very different views about money and how to invest, save, and spend it. Those matters will not get resolved with generic advice or a canned email that has been programmed to mention a very generic detail about a client.
Large institutions strive to project an image of authenticity to establish trust with their customers. However, achieving authenticity can be challenging for these entities due to their size, service structure, and bureaucracy. They may emphasize personalization and individual attention in their marketing but still use standardized processes behind the scenes. Their perceived authenticity may not align with the reality of impersonal procedures and profit-driven decision-making. Consumers need to remain discerning and critically evaluate whether an institution's actions truly reflect the values they claim to uphold.
Unfortunately, too many people don’t know that they’re not getting quality advice or guidance – and sometimes pay much higher fees for it.
Simple analogy on company structure. The different types of financial advisory services are like the difference between McDonald’s, Ruth’s Chris Steakhouse, and the local farm-to-table restaurant. McDonald's is by far the least expensive. The food is not particularly nutritious, but it’s very consistent. It will be very similar to any franchise around the world despite different cultures and language barriers. At the top end of franchise restaurants, you have restaurants like Ruth’s Chris steakhouses. They offer a high quality/high priced menu, but it’s very limited and like McDonald’s, it’s almost identical from one franchise to the other. Then you have farm-to-table or boutique restaurants where the staff gets to know you, uses only the freshest ingredients, and whips up unique dishes from scratch that are customized to your preferences.
Simple analogy on employee planner preparedness. Consider contractors that work on your home. I’m sure you’ve all had a wide range of experiences with them. In the past, contractors had to start as apprentices or journeymen and learned the tools of the trade from the masters of their craft. Today, almost anyone can call themselves a “professional” contractor or landscaper if they can afford a truck, build a website and put an ad in the local paper or neighborhood social media.
That’s how I feel about all the financial service industry workers billing themselves as “wealth managers” and “wealth advisors.” Unfortunately, software, algorithms, and slick marketing are masking the inexperience and lack of knowledge that many of these “advisors” lack.
By contrast, a qualified certified financial planner, who is highly knowledgeable and uses a personalized approach for each client, increases the client's confidence. Why? Because they have the capacity and capability of thinking in ways that the client doesn't know to think. Working with a small number of clients on a highly personal level and providing them with the care and nurturing they need, is a far cry from relying on software to personalize communication with you and the financial solutions it recommends. Which approach would you rather have to help you make the best possible decisions for you and your family?
Conclusion If you or someone close to you has concerns about the level of financial advice you are receiving, contact us any time to discuss. We’re happy to help.
ROBERT B. DUNN, CFP® is the President and Managing Partner of Novi Wealth
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