Mastering the discovery phase of financial planning

By Mark Dorfman

When you go to the doctor, you explain what feels wrong or share your symptoms for them to diagnose the problem. The same is true for our business as financial advisors. Our job is to find problems that may lie in a client’s current financial situation, and just like doctors, we take a personalized approach to finding the best outcome for our clients.

Such an approach establishes trust between you and the client, allowing them to see you as an expert and follow your advice. Throughout my 35 years of experience, I’ve found a few specific discussion topics that provide a full picture of a client’s finances and help them establish goals for the future.

It’s a conversation, not a transaction

Discovery is important for all financial advisors; this step informs the entire financial plan and begins the relationship between client and advisor. I prefer to begin discovery with a conversation rather than asking simple yes or no questions about their finances.

This is where I personalize the approach – I can ask questions about family members while also learning about their financial needs. I’ve found that clients also feel more comfortable and confident in their answers. Talking to a person about their life is much more engaging for them than filling out an intake survey.

The goal here is to catalog the client’s assets, understanding everything about their current finances. By adding in the context and connecting it to their life via conversation, you’re more likely to get all the information you need.

Each goal and piece of their identity can be uncovered by asking thoughtful questions, which in turn enables you to craft a holistic plan and financial goals. I approach these conversations by working through four different topics of information:

1. Personal

Start by getting to know the person – asking personal questions to find out who they are will help to make them feel comfortable and build a connection. I say things like, “Tell me about your family; what are their names? What are their ages? How about your extended family?”

These questions open the conversation to family-based goals that align with what their household looks like. Whether they want to support their child with a college savings plan or are looking to buy their first home, these goals can naturally reveal themselves in conversation.

You can also begin to learn about financial identity, such as whether they have an estate plan and how much they want to leave behind for their loved ones. Clients may not have thought about these goals, and the context of what they want for their family can make it easier to come to conclusions.

2. Real Estate

This topic covers the client’s physical assets. You can start out with questions like, “What physical assets do you have,” and get more specific with, “What is your living situation? Are you renting or do you own your home? What is your mortgage like?” These are, again, basic questions, but when asked in the context of the conversation, they can unveil the financial needs of the client.

You can then delve into the details, determining if they have any investment real estate that provides additional income, or if their surviving spouse would have ownership of any real estate based on the current plan between business partners.

3. Business and Income

Continuing to paint the client’s full financial picture, it’s essential to understand their income sources. Are they a businessowner? Do they work somewhere? Starting here, begin asking about what their plans around income are. I will ask, “Do you have a plan for if this source of income were to dry up?”

This will highlight the insurance coverage a client may have and any other potential income. If they own a business, pose questions like, “What percentage do you own? What is the plan between you and your business partner(s) if one of you were to pass?” Questions like these will lead to potential solutions to later add to a financial plan.

4. Retirement and Insurance

This area is a catch-all for any information related to specific products they may have. Continue the conversation you had in the personal section – what do they want retirement to look like, how much would they want to leave behind for loved ones, what sort of insurance do they have and what does it cover? Some folks may not even understand what they already have. It’s best to get as many details as you can, with the ability to review the fine print of their products later.

Clients often have certain products without knowing their purpose. For example, a client may have purchased an annuity but have no idea how it benefits them. Take this opportunity to educate and pull back the curtains – transparency here can help clients identify gaps in their coverage.

When I’ve chatted through these topics with clients, I always end up with a comprehensive vision of my client and their values. It’s then easy to point out where their financial plans could be stronger or where they have risk from a lack of insurance coverage. At this point, your clients will feel more comfortable discussing finances with you.

Set the stage for their financial goals and prepare them for a follow-up discussion after you review their information. Taking this conversational approach shows clients they are not another number on a list, and that your team is devoted to a plan that reflects their goals and values.

About the Author
Mark Dorfman is a 26-year MDRT member, serving as the CEO of ODI Financial in New York. Dorfman has over 35 years of experience, achieving Top of the Table status in his tenure as an MDRT member. Dorfman’s goal is to help his clients grow and protect their wealth. Mark simplifies the complexities of financial planning matters and helps his clients reach their financial goals, however ambitious they may be. He believes we can all reach a higher level of success with “no tsuris” (no trouble).