Eliciting client objectives – vital, but often underrated

6 May 2015

One of the most important things a financial adviser can do for a client is to help the client identify their financial and broader personal goals. 

After speaking with many individuals and a number of experienced financial advisers, it has become plain to me that very few people have clear goals, financial or otherwise.

The belief that clients come into a financial adviser’s office knowing exactly what they want to achieve is not useful and nor is it based on reality. It may be true for a small minority of people, but it’s not true for the majority of people. 

It’s absolutely true that the client is best positioned to determine what their goals are. The role of a good financial adviser is to get to know the client and, over the course of time, elicit from the client what they are wanting to achieve, and help them develop a strategy to achieve that. 

Are you skeptical? You should be. But I’ll provide a couple of examples.

  • How many clients have given sober thought to their retirement objectives, let alone have a clear idea of what they want to achieve? When do they want to retire? What sort of retirement lifestyle do they want to have? How much will it cost to maintain that lifestyle? What sort of asset base are they likely to need to meet that lifestyle? 
  • It’s not uncommon for clients to have very specific goals. For example, in the next five years they may want to have developed a portfolio of five investment properties. Is this a first order goal, or is it a second order goal intended to help them achieve a more important outcome such as “financial independence”?
  • On the flip side, are their goals too amorphous? I used the example of “financial independence” above, because it’s an example of a goal that can mean very different things to different people. What does it mean for your client to be financially independent? When do they want to achieve it?
  • Does your client have any specific ideas about whether and how they want to help out members of their family? What assistance do they want to provide, for example, in terms of education and housing? 
  • What are some of the “soft” aspects of their goals that don’t ordinarily fit into a discussion of goal setting? Very few people consider the extent to which they want to be able to sleep at night knowing that they have measures in place to ensure that they (and their loved ones) will be okay should the worst happen. But once you start asking the right questions, they start to see the importance of protecting themselves against the downside. To what degree do they want to be able to sleep at night? To what degree do they want a sense of control (real or imagined) and transparency regarding their affairs?  

Talking with a client and identifying their objectives is an ongoing dialogue. Goals change over the course of a lifetime, and in the face of changing circumstances and new opportunities. 

Furthermore, it might be impossible to know what they “should” be aiming for. Does anyone really know how much they’re going to need during their retirement years? How long will they live? What medical issues might arise? For a given level of risk, what type of return might they be able to anticipate? 

Broad sentiments like having a “comfortable retirement” or becoming “financially independent” may also need to be redefined periodically. 

Why do I think this is such a vital skill? 

For a start, it’s virtually impossible to provide good quality financial advice without knowing a client’s objectives. A financial strategy means little to nothing without knowing a client and their objectives. 

It also opens up ways for a financial adviser to provide significant value to their clients other than in the traditional product-focused model.

By having a continuing dialogue with a client, a financial adviser can also become a behavioural coach, who can help his or her clients on track towards achieving their financial goals.

By helping clients identify their goals, the adviser can help the client appreciate that in many cases it’s necessary to make compromises. With the benefit of clarity, clients might understand that some of their goals may need to be ceded to other objectives, either temporarily or permanently. 

This also puts the adviser in the important position of acting as a sounding board when a client makes a financial decision, and provide independent counsel with respect to how well they are prioritising their competing goals. 

For example: a client can buy the Lexus rather than the Toyota, but it’s worth pointing out that the extra $30,000 could be used towards other means, such as bringing retirement forward or providing a greater degree of certainty or comfort in retirement. Living in a $1.2 million house might be nicer than a $1 million house, but has anyone asked whether it’s worth it, especially in the context of other financial and lifestyle goals – such as the prospect of being mortgage free a number of years earlier than they would otherwise be?


I think this skill is underrated because it’s not one of the areas in the financial advice industry that is specifically regulated. Identifying a client’s circumstances, needs, and objectives are essential parts of the adviser process. But collecting this information doesn’t trigger a regulatory requirement, such as needing to provide specific disclosure to a client. Arguably, a person could go around to clients and help them identify their goals, and not need to be registered as a financial services provider or an AFA. But they would still be providing a valuable service. 


About the author 

Sonnie Bailey

In his spare time, Sonnie likes telling people that he’s a former Olympic power walker, a lion tamer, or that he is an orthodontist. He is none of those things. In reality, Sonnie is a financial planner based in Christchurch. Through his business, Fairhaven Wealth (www.fairhavenwealth.co.nz), he provides independent, advice-only, fixed-fee financial planning services. Sonnie is a “recovering lawyer”: he has specialised in trusts and personal client work. He has also worked as a financial services lawyer for many years.

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