Look Beyond the Client's Ask
This time we hear from Stephanie Rinschler Trentowski, a financial advisor at Creative Financial Group in Newark, Del. She recalls how one client taught her to always look deeper for opportunities to help, even if the client doesn’t initially request certain services.
I have a client who hired us to manage her IRA. She is single, in her early 60s, and needed help saving for retirement, so we brought her on under our asset management services. I quickly found out that she had $15,000 in credit card debt, so we advised her to withdraw from her IRA to pay off most of the debt and start fresh.
One year after initially signing her as a client, we met with her to review her allocation and performance and learned that she’d started accumulating a balance on her credit cards again. Despite our wanting to help, she hadn’t hired us to help her with debt management and we thought the extra fee for this service would only add to her current load. At the time we couldn’t justify it for someone living paycheck-to-paycheck but we continued to give her occasional cash management tips, hoping she would change her spending habits on her own.
However, at our second annual review, her credit card debt was up to about $12,000 -- high enough that we knew we had to step in. After getting to know her for two years we decided to offer her debt management and financial coaching services because it was clear she needed someone to hold her accountable. If she ever wanted to retire she needed to learn how to manage her day-to-day finances, and we would have to teach her how.
At that meeting we told her we could discount the fee since she was a current client and proposed helping her with cash flow management over the next year.
When we suggested the financial coaching service the client grew emotional and admitted that she really needed help; there was nobody in her life assisting with any decisions, financial or otherwise. The planning fee added $2,000 to her liabilities, which we were able to draw from accrued vacation time. Now she had several advisors on retainer to help her restructure her debt and put a budget together.
For the first several months we met with her monthly to ensure she was paying her bills on time and not spending frivolously. We created a spreadsheet showing her when her bills were due versus when she got paid. Discovering that she had roughly $300 of discretionary income per month after bills, we called several of her service companies to change the due dates in order to help manage the cash flow.
Once the client had a team holding her accountable, she began to think twice about what she was buying. Monthly check-ins forced her to develop a routine and learn ways to save money by cutting down on miscellaneous shopping and dining out. This year, she's going to file for Social Security and is prepared for the first several checks to go straight toward wiping out credit card debt.
Although it was difficult at first to ask this client to pay for another service, it was mutually beneficial in the long run. Her debt has decreased exponentially, we have taught her healthy financial habits, and she is held accountable by a team of advisors who care about her goals.
More and more we have begun to implement financial plans right away to guide clients from the start. Of course we can manage money and assets to help clients reach their goals, but the most important part of the equation is how that actually ties in with their daily spending habits. By uncovering the details of a client’s spending behaviors, we are more equipped to encourage mindful choices that support their end goals. It’s helpful to remember that even when it may look like a client might have a tough time affording extra services, we really are saving them money in the long run.