The Benefits of Values-Based Planning

By RENEE HANSON 
For AdvisorNews

Values-based planning can help improve your practice by allowing you to better advise your clients, predict their behavior under stress and focus your conversations. If you’re interested in incorporating this approach into your practice, review the three recommendations below.

Focus On Solutions To Meet Clients’ Needs

First, determine what’s truly important to your clients by identifying their top five values. Once you uncover what your clients value in life, along with their financial goals and tolerance for risk, you’ll be in a better position to discuss the solutions needed to help them achieve their objectives.

When I enter into a meeting with a client, the first thing I do is remind them why they hired me. For example, I will say, “You’ve asked me to help you maintain your retirement and feel comfortable that you can afford your travels, because the values that are important to you are security and autonomy.”

If you understand the emotional reasoning behind a request before you suggest a practical solution, you may be able to give your clients advice that they feel comfortable acting on. In turn, your client will likely feel more understood, and you will be more likely to deepen your relationship with them.

Understand What’s Actually Important

Once you have this knowledge, remind clients of their values when they have doubts about investing. If one of their values is family, remind them why they are investing in the first place – to provide for and protect their loved ones. Remember that investing is only one part of our job. Our main job is to solve clients’ needs by understanding who they are and what is important to them.

Knowing a client’s values can, at times, also help you protect them. You can better predict the decisions they will make under stress. For example, if a client tells you they are an aggressive investor, but you see security is one of their top values, the client may be prone to make some impulsive and potentially unwise decisions if the market fluctuates. To that end, help your client plan accordingly and establish a cash cushion that they can rely on if necessary.

At the same time, make sure you never assume a client’s values. I’ve caught myself telling a client, “I know this is important to you.” Do your best to understand their values but know that values can change and evolve. At certain touch points, it may be helpful to ask your clients, “You’ve told me this is important to you in the past, is it still?” If their values have evolved, ask them to help you better understand their viewpoints.

Create Tools To Help You Incorporate Values-based Planning

I ask each new client to complete a worksheet, which includes information on values such as integrity, autonomy, economy and friendship. This worksheet has morphed over time, but I’ve settled on one that gives me the information I need and doesn’t take too much time for clients to complete.

Incorporating values-based planning into my practice was key to helping me grow my practice and meet my clients’ needs. If you’re interested in including values-based planning in your practice, I encourage you to read a book related to the topic or attend training sessions. A background in psychology can help, but you’ll also need to understand how values relate to financial planning before diving in. Once incorporated into your practice, it can be truly invaluable.

Renee Hanson has been a private wealth advisor with Affinity Wealth Advisory Group for 21 years. She is a five-year MDRT member and resides in Phoenix, AZ.