80% say “Help Me!”

On May 20th, Manulife Bank released the results of a survey: http://www.bit.ly/cIqjiX. You may have read about it. The results show that over 80% of Canadians rank becoming debt free as a top financial priority. Even with all the volatility we live in today, debt is still keeping our clients – and maybe even us – awake at night.

While I was in no way surprised by these results, I am driven by them. More significant than that 80% is the fact that very few were able to actually accomplish those shifts in their personal balance sheet that they so desire. Not surprising but certainly that’s fuel for my fire!

I know many advisors are taking a lot of the heat for the market’s erratic behavior but we are missing out on what clients are really stressed by. In fact, in 2008/2009, while I can’t claim to have clients who are not worried about the market, I can share that working with something a client could truly control, like debt, gave them a sense of empowerment. It helped us find the balance and extra money to invest while the market was at the bottom of some of those value valleys.

A very good friend and fellow advisor, Wendy Brookhouse, taught me a term I now use daily: “Self Reference Criteria”, SRC for short. SRC is when we use our own view of a situation as true fact. As an industry, I think there is a lot of SRC going on and it’s going on at all levels, from senior management of large financial firms to individual advisors. Too often assumptions based on the view of a individual are falsely assigned to the masses without evidence.

We must search for evidence rather than relying on our own vantage point. For example, 30 days after the March 9, 2009 market bottom, RBC conducted a retirement study and yielded some eye-opening results. 62% of the boomers contacted indicated that in the midst of all the market chaos their top financial priority was debt repayment. What is most significant about that 62% is that just 6 months prior it was half that number – only 31% identified the same priority: http://www.rbc.com/newsroom/2009/0507-boomer.html.

If they had surveyed financial professionals of any stripe at that same point in time, asking them what they thought would be the main financial concern of boomers, do you think the result would have resembled the evidence or the SRC of our industry?

Surprised? Prepared? Are you missing the mark with your boomer clients? Could you be proactively helping them capture chunks of their potential life savings that they are currently donating to their lenders in the form of inefficient interest? What if you could help a client make up for some of the volatile effects they’ve suffered over these last few years by treating a dollar spent on interest as if it has as much value to the client as a dollar gained on their investments? After all, isn’t that dollar a dollar regardless of where it comes from?

If you aren’t willing to give your clients this advice, how much longer will they wait before they start looking for someone who will or worse, turn to a TV program for the advice a professional who actually knows them should be providing. That same RBC study showed that TV and other forms of media were a not-so-distant second for those same boomers to find their financial advice. I don’t know if you ever watch any of these TV money mavens, but your sleep deprived clients worried about debt surly do. Do you know what they are saying? Do you agree with it?

The facts are that we as Canadians need to get off our high horses and stop interpreting the news that our economy and banking systems are in better shape than other countries to mean that we and our clients are in better fiscal shape. In far too many cases it just isn’t true. We are far from shipshape when it comes to personal debt in this country.

As of May 11th, the Financial Post reported that Canada was a real winner, topping the OECD’s list of countries as having the highest debt-to-financial asset ratio. To put that in perspective, that beats out Greece, the U.S. is in fourth and every man, woman and infant is, on average, in our country is $41,740 in debt: http://www.financialpost.com/news-sectors/story.html?id=3013137

So let’s stop with the undeserved pats on the back about our economy and stop telling ourselves these stats are about someone else’s clients. It is simply not true. We will all be affected by this somehow, some way. The question is what are you going to do about it?

It is my belief that advisors are more capable of putting a dent in this debt than any politician, finance minister, Bank of Canada governor, or financial institution put together. We are the ones looking our clients and ourselves in the eye every day; we are the ones they already trust. So, rather than waiting for some magic money fairies to come down from the sky and fix this for us, lets help our clients take their financial power back and help them dig out from the debt mountain.

Now, who’s with me?