The Five C’s We Expect From Our Advisors

Have you fretted over an unpredictable situation?  My anxiety increases when I have to face my fears and need to be honest with my family, friends, and sometimes clients.  I am concerned our relationship may be jeopardized.  Perhaps you face the same dilemma. 

When someone has a problem or a concern, they may ask for our advice.  We realize our answer might not be one they want to hear.  Potentially they may be upset that we even suggested such a preposterous solution. 

 

Take this situation from a different angle. Imagine a tough conversation with your advisor about budgeting, succession planning, or a major real estate purchase. You need financial direction. Because of your solid relationship, whatever advice your advisor offers, you would certainly consider. You wouldn’t expect your advisor to be shaking in their boots afraid of your response. After all, you are counting on their expertise to help you analyze the best option.  However, you have to evaluate their qualifications and it’s acceptable to do so.

My top five C’s are intermingled with a few minor C’s.  Feel free to pick through the entire list of attributes. 

  

Competent

Because our advisors possess the professional knowledge, we trust their judgment. We simply cannot know all the fine details about a specific topic. Take tax planning as an example. The Income Tax Act is complicated to understand.  Not all the pieces of the tax legislation apply to everyone; however, we still need to filter through the pieces pertaining to our unique situations.

Whether it’s tax planning, legal advice, or insurance analysis, we are presented with many possibilities which make our final decision more onerous. Choosing what is in our best interest needs to be interpreted by a professional   This leads us to the next skill our professional advisor must possess.

Communicators

Because our advisor communicates effectively, we recognize the reasons behind their recommendations. They talk at our level of understanding. Quite often the industry’s jargon will fly over our heads so any strategies must be explained in easy-to-understand language. Logic dictates that if we don’t understand the plan, we won’t understand the benefits. Communication is a two-way street.  Our professional advisor may possess all the textbook knowledge but the real skill is delivering the information so we get it.

Imagine your accountant saying, “We need to complete the Section 85 Rollover Form” versus “We need to complete the Do-Not-Tax-Me Form”. Notice the walls of the language barrier self-destruct. When our advisor takes down any language barriers, they are building trust in our relationship.  We automatically feel an ownership in the strategy because they communicated their reasons effectively.   

Candid

Because our advisor is candid, we can trust and believe their advice is in our best interest. As our relationship continues to build, we develop a strong connection.  This ideal chemistry allows our minds to be opened to tough conversations when we are told something with sincere honesty that our way isn’t foolproof.

   

     “That vehicle loan you think you need will financially drag you down. The debt servicing  calculation shows where you stand.” 

        

This takes us to the next quality we should expect from our advisor.

Courageous

Because our advisor is undeniably confident, we can expect them to be fearlessly courageous with us.  Sitting on the other side of the desk in their office or around our kitchen table, we should expect our advisors to be courageously upfront with us even though we may not initially appreciate what they have to say. 

     “It’s going to cost us how much?”

     “You are telling me this is what can happen if I don’t do that?” 

Certainly, the expectation is there’ll be some objections (or pushback) when an idea is first presented.  But here’s the reality, we don’t need someone to appease us.  When they understand our situation and have the courage to tell us, then we are given the right information to make a wise choice.  We don’t have to like what they are saying to understand what they are saying is for our benefit.   

For any business, the two most difficult topics are succession and estate planning.  When business decisions impact an entire family, that’s a different ball game than selling a business and retiring with the sale proceeds.  This is when we expect our advisors to step up to the plate and help create a financial plan for a family business.  

Committed

Because our advisor is 100% committed to us, we feel confident in our decisions.  They presented all the facts, they completed their homework, they developed potential solutions, they explained the benefits and consequences of actions.  They have given their all (skills, knowledge, and expertise). When they hand in the assignment we have given them, then we can grade them on their performance based on our satisfaction. Most likely, they achieve a high mark because of their commitment to us.  When we are at peace with their advice, we can rest knowing our affairs are in order.

It’s a known fact that people in any sales industry (banking, insurance, dealerships, investments, etc.) have sales targets. Advisors who put our interests before their own earn our respect.  Our appreciation grows for the advisor who sets aside the target in the interest of doing what’s best for us.  Knowing our needs matter tells us our advisor is completely committed to doing their best for us. 

Togetherness

The next time you pick up a coin, pay attention to both sides.  You would agree neither side contributes more to its value.  The value is determined in unison. This truth applies to the relationship between our advisors and us.  The value of our joint relationship determines our success in our personal, financial, and business lives.   Neither of us (the advisor or client) should fear honesty because we are afraid of jeopardizing the relationship.  (In fact, the opposite could happen when we are not truthful. Our relationship may be compromised.)

When intentions are sincere and the advice is solid, the outcome will always be positive.  Great advice is directed to help and not harm us.  Regardless whether you are the taker or deliverer of advice, your relationship is built on a foundation of trust and respect and no one should have anything to fear. 

Good Advice is Like a Gift

Once people read To Whom Do You Listen, they were invited to share the best advice they received from family, friends, or colleagues.  Most financial advice is derived from parents’ and grandparents’ experiences, both good and bad.  Their advice, both inspirational and cautionary, is shared because family members love their children and want only the best for them. Their sincere intentions are to protect them from making bad decisions.
 

Good advice doesn’t cost anything yet it can also be an expensive gift when applied.  During the Christmas Season, we have a tradition of sharing gifts.  Are there any gold nuggets of financial wisdom in the list below which you can use?

Best Gifts of Advice My Colleagues Received From Others:

• Start saving your money from your early years, the beginning of your working years.

• While it is important to save, it is still important to live in the moment and spend some of your money to enjoy life and create memories because you can’t take it with you.

• Life is short; don’t be afraid to enjoy the money you’ve earned but most importantly, don’t forget to save it also.  Find a good balance.

• Don’t be afraid to take “educated” risks while savings and investing.  Educate yourself through research or asking people who are trained to help.

• Every penny saved counts.

• Don’t buy something if you can’t pay for it with cash.  This meant non-essential items.

• “What are your priorities?” “Slow down.” If you know what your priorities are then it is easier to allocate funds for those things.  If you slow down you do not spend as much on extra things and make better choices on where you do spend your money.

• Prepay your mortgage by at least one payment (just in case) or have it available in a savings account as back-up.

• See an estate planner.

• If you want something bad enough, then buy it (or do it), even if you can’t really afford it.  If you wait until you can afford it, your health might not be there for you to enjoy it, and you will live with regrets for not doing it when you could.  Just be careful not to use this as an excuse to buy anything and everything.

• Farming philosophy is not getting into too much debt; just keep building slowly and your asset base just keeps building. (The turtle and hare philosophy!)

• Start putting some money into RRSPs from a very young age once you have completed university.

• Pay more than the minimum required on debts even if it’s only an extra $5 or $10 each payment. These little bits will add up over the long haul.

• “Don’t bite off more than you can chew.”  This means don’t take on more debt than you can handle. 

• My Grandmother started me on the path to having a “save-something-for-a-rainy-day” mentality from an early age.  Her advice of “a penny saved is a penny earned” has taken me far in the area of family budgeting.  She taught me that the “early bird catches the worm” phrase applied to learning to save some money at a young age as well.  I continue to teach my grandchildren the same principles of “counting the cost before going ahead”, both in finances and relationship decisions. 

As this year comes to a close, you may be seeking good advice to apply in the new year.  Although you may want to make many changes, I recommend only starting with one.  Too many changes at once may cause you to become overwhelmed which in turn may lead you to do nothing.  What’s the point in that strategy?  As you look back on this year, examine your experiences, both good and bad.  See where a change is necessary and accept some worthy advice.