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Financial planning is much more than just doing the math


As a youngster, I was taught that “If you can’t say anything nice about a person, simply keep your mouth shut.” Respect was the norm, not the exception. People who had a different opinion on any subject weren’t considered an opponent. They were just someone you could stay up into the wee hours of the morning discussing and debating a topic, even if you had an early class the next morning.

I firmly believe that somewhere along the way, people forgot how to listen. I mean really listen. It seems these days, instead of listening and absorbing, people are formulating their rebuttal.

When it comes to your finances, listening is a vital attribute. Take the multitude of radio and television outlets that feature investing and financial planning programs, for example. The host tells you the best place to invest, the best plan to follow and the best place to retire. In his or her opinion, of course. So the point is, you can either accept or reject their suggestions and recommendations.

That being said, the reason I enjoy my field so much is because there is no one-size-fits-all approach. The math may be similar for two families with comparable goals and objectives, but their mental makeup can be significantly different. That’s why good financial advisors not only need to know their subject matter and material, they also need to know how to be an exceptional listener. How else can you understand what clients really want and be aware of their comfort levels?

When I’m with a client behind closed doors in my office, I make it a point to listen for three things: their mind, their heart and their pocketbook. A good example is the decision to pay off a mortgage. As an advisor, it’s possible I could show a client mathematically why it’s wiser to carry a mortgage into retirement.The client could have a favorable low interest rate, the loan interest might help reduce their income tax burden, or they could be at the stage of where the bulk of their payment goes to reducing principal. The math may indicate maintaining the mortgage, but the heart may say, “I can enjoy retirement better if the mortgage is paid off.”

If their pocketbook book agrees and they have adequate funds, I might conclude that the heart and the pocketbook trump the math in this situation. But if I didn’t ask and listen, the option might never have been on the table for discussion.

Another big decision is when to file for Social Security benefits. Sure, it’s easy enough to crunch the numbers and determine the best time to collect for the maximum return. But again, good planning requires knowing the client’s mindset too.

I think financial advisors should be among the very best of listeners. They should not only be able to calculate the math and determine the optimum strategies, but also know how to factor an individual’s heart and pocketbook into the equation.

I’m confident that’s exactly what top advisors do. Being a good listener, by the way, isn’t just an excellent trait in the financial world. It’s a good quality, period.

I encourage everyone to be a careful and thoughtful listener. You might be surprised at what you hear and learn.