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Adrian Mastracci, portfolio manager at KCM Wealth Management, says “I encourage open and frank dialogue from the outset about the important issues. I need the clients to be forthcoming about their life changes, concerns, and dreams." |
Vancouver, BC (May 18, 2007): Recently, I was musing about this question: "what are new clients most concerned with when they come in for the first meeting?"
Fleet Admiral, William F. Halsey once said, “All problems become smaller if you don't dodge them but confront them.”
Adrian Mastracci, fee-only portfolio manager at Vancouver based KCM Wealth Management comments, “I ask new clients to provide me with some personal background before the meeting.”
The meeting revolves around “what is important about the finances to the client?” One significant item for discussion is a list of the top financial concerns. Another is an indication of where the client would like to be financially, say in 5 to 10 years.
I encourage open and frank dialogue from the outset about the important issues. I need the clients to be forthcoming about their life changes, concerns, and dreams.
I need to understand how clients feel about their money and their future. Listening attentively leads to the better plan of action.
I've split the client concerns into two camps. First, the nest egg accumulation phase and then the actual retirement phase. Otherwise known as the saving and spending stages.
The accumulation phase may develop over 20 years or more. Similarly, the retirement phase often also spans 20 years or more. A total time lasting around five decades is not unusual.
I peeked back into the last couple of years of first meetings and collected the top 10 concerns from each group:
Accumulation Phase Concerns
These concerns are from employed investors who have substantially tackled the house mortgage. They are in the midst of directing savings primarily into RRSPs, personal and business accounts.
- What can I do to grow and protect my nest egg?
- Do I have enough time to accumulate the retirement capital I need?
- How much should I save to achieve my retirement goal?
- What investment returns can I expect within my risk tolerances?
- Am I on the right track to reach my retirement?
- How can I best make use of the RRSP?
- How can I save for my children’s education?
- What can I do to pay the least amount of income tax?
- How can I simplify my investments?
- What income splitting can I pursue with my spouse/partner?
Retirement Phase Concerns
These concerns are from retired investors, most no longer working. They are drawing a retirement income from the accumulated nest egg. The majority are not directing any further savings into it.
- What can I do to protect my retirement nest egg?
- Do I have sufficient capital for my retirement?
- How can I best use my RRSP/RRIF during retirement?
- How much investment risk am I incurring?
- What are the chances that I could outlive my money?
- What if I become unable to travel or stay in my home?
- How can I best help my children financially now?
- What income splitting can I pursue with my spouse/partner?
- Does my mix of income result in the least income tax?
- How can I insure that my spouse, who is not into finances, is looked after if I die first?
My main observation from first meetings is that protecting the nest egg is high priority. The continuing low-return, fixed-income environment is also a concern. Lastly, many portfolios are a muddle of too many funds.
There are many combinations of concerns. All too often, they may seem overwhelming.
A coordinated game plan is the medicine that overcomes a lot of concerns. It confronts them face-to-face.
Clients value the straightforward, candid approach. Dealing head-on with the issues that matter.
I welcome your comments. I am available for a discussion.
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