Gavin Smith CFP® has been a financial planner for 10 years. But a recent experience with a mail-order trampoline was something of a Eureka moment for him.
My wife and I became parents in 2020. For my son’s second birthday, we decided to get him a trampoline. We’d seen how much fun our friends’ kids had on their trampolines – and it’s meant to be really good for their muscle tone.
I didn’t know what to expect when I bought it: I just looked for the one with the best reviews and added it to the cart. When it arrived a few days later, I was a bit shocked by how many pieces were in the box. I knew I’d have to assemble it myself, but I wasn’t expecting to build it from scratch.
Still, I didn’t expect it to take longer than 45 minutes or so. I’m fairly handy, and the instructions looked straightforward enough. The idea was for my wife and I to put it up before we fetched Matthew from school, so he could come home to a surprise on his birthday.
Putting the frame together was quite easy, but things started to go wrong when we had to put in the jumping mat. We started off a bit “dumb”, as we put the first few springs too close together and the tension was all wrong. We tried to compensate by doing a few on the opposite side, but that didn’t work either. We had to take them all out and start again.
My wife ended up fetching Matthew late, and the trampoline still wasn’t ready when he got home. Initially, I was a bit disappointed not to have pulled it off. But when I saw how happy he was jumping on it later that afternoon, I felt good again.
It’s been months since we put up the trampoline, and I can only think of a few days when it’s been too wet for him to jump. (We live in the Cape, so rain is an occupational hazard.) Mathew’s got hours and hours and hours of enjoyment out of the trampoline – and we’ve benefited from a tired and happy son who’s much easier to put to bed in the evening. Looking back, I reckon it’s probably one of the best investments I’ve ever made.
Nice story. But what does it have to do with financial planning?
A few days later, I was comparing notes with a friend who’d also struggled to build a trampoline for his kids – and it dawned on me that the experience was quite similar to onboarding a new financial planning client. I didn’t say anything at the time, as I didn’t want to dampen the mood. But I’ve been thinking quite a lot about it since then and the similarities really are striking.
Proper financial planning requires a fairly hefty initial time investment – from both the client and the adviser. It can’t happen around the braai and it’s not about buzzwords.
When I enlist a new client, I like to see them three times in the first month. The first meeting is a getting-to-know-you session where we feel one another out and decide whether the relationship is going to work. Financial planning is a lifelong endeavour, so it’s important that the client and the adviser get along. During this session, I ask only a few probing questions and allow the client (or clients, if it is a couple) to do all the talking.
Here’s one of my favourite questions to ask during the first meeting: “In three years’ time, what will have had to happen personally and professionally for you to say the last three years were a success?” I sit back and allow the client to answer the question – occasionally prodding them to elaborate or provide more details.
The big purpose of this meeting is for the client to talk and for me to listen. This can be hard because many financial planners love the sound of their own voice. But it’s very important for the client to do the talking. During this meeting, I get an indication of the client’s risk appetite, but to make a more precise assessment of what kind of investor they are, I ask them to complete a risk profile questionnaire.
The client has to live out the plan
In the second meeting, once I’ve learnt a bit about my new client’s hopes and dreams, I hand over the financial plan I’ve prepared for them. To prepare the plan, I take into account their financial and domestic situation and, of course, their appetite for risk – in all spheres of life. I’m a very cautious driver, for example, but quite an aggressive investor.
Throughout this second the meeting, I remind my client that the plan isn’t for me and that I won’t be implementing the recommendations. Of course, I’ll be there to guide them: but when push comes to shove, the onus is on them to live out the plan.
Experience has taught me that clients will sometimes implement a recommendation not because they believe in it, but because it feels like the “right thing to do”. That’s why, during this meeting, I am not looking for the proverbial “yes”. My aim is to take them through the financial plan and then to give them some time to think about implementing it. Should they decide to implement it there will be a third meeting.
In the third meeting, we get down to the nitty-gritty. Although I believe the first two meetings must be face-to-face, this one can be a virtual meeting. Here I may recommend they invest in some financial products – disability cover, for example, or a tax-free savings account – but sometimes it’ll be more about addressing their financial behaviour. I’m lucky not to work on a commission basis, so I don’t have to “sell products” to earn a living. (This is also vastly beneficial to my clients, as they won’t be persuaded to purchase policies they don’t really need.)
After those first three hours, the client will be up-and-running with a custom-made financial plan that meets their family’s wants, needs and personality. Now that the hard work’s out of the way, I need only about one hour of a client’s time every year, to give their financial plan its “annual service” to ensure it’s still fit for purpose.
The bottom line
It took me three hours to build the trampoline that’s already given my son countless hours of joy. And it takes me three hours to set up a financial plan that will hopefully result in a happy, healthy and wealthy retirement for my clients.
It will take you 86 hours to binge-watch the series Friends, and at the end of it all you still won’t know for certain if they were “on a break”. On the other hand, less than 50 hours spread across your entire adult life can add some serious bounce to your financial well-being. In fact, it can create a legacy that transcends generations. Pretty exciting stuff – as long as you’re prepared to set aside three hours to build the trampoline that will leave you and your family jumping for financial joy.
This article was provided courtesy of FinCommunications.
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