NOT your responsibility, totally YOUR problem

In April, I traveled across the country on a speaking tour as part of the ‘World Critical Illness Insurance Conferences Road Show’. One of the subjects my fellow speakers talked about was critical illness insurance and how important it was. How the lives of their clients (or even their own) had been changed forever because of the safety its benefits had provided. Some spoke of sales ideas and concepts. Others of the ways, we as advisors, could improve our lives and business. How we could be better presenters or provide more efficient services.

My topic, on the other hand, was a little bit different. It was ‘How NOT to Mind Your Own Business’. In my 30 minute presentation, I did my utmost to demonstrate the validity and need for planning that addressed the other side of the balance sheet. My point was by not bothering our clients about their debt, we do far more harm than good. I suggested that we need to find ways to get past the discomfort and help our clients push forward so they could make meaningful financial change.

While I know I’ll never get everyone to agree with my point of view, I must say I was pleasantly surprised by the reaction of my fellow financial advisors. My message resonated with many of the people I spoke to. Many advisors understood the importance of what I was talking about and agreed something must be done. They had many, many questions for me like ‘How do I add this to my financial planning repertoire?’ or ‘How to make this value-add, add value to my business too?’

“This is great, but I’m not pouring over my client bank statements for hours to figure out how much they spent on coffee,” one advisor said to me after my talk in Saskatoon.

“Good point. I wouldn’t want to spend hours doing that either, and I don’t, but I still know how much they spend on coffee. I found that technology could help me take that part of the process from hours to minutes,” I replied.

The advisor wanted to know about the tool I had used and why I didn’t mention it in my presentation. In the next city I did and it really helped advisors to see the barriers in dealing with client debt and cash flow fade.

As advisors, we really do need to start being part of our clients’ cash flow management solution. This past week, the reasons why everyone should consider what their practice offers in this regard multiplied. You see, I’ve been noticing for some time that one financial institution seems to be leading the pack with their volume of research on how clients not only manage debt and cash flow but how they feel about it. The news they presented on May 31st was no surprise to me. RBC announced the launch of myFinanceTracker, a cash flow management tool integrated into their online banking system for their customers. It’s equipped with all kinds of neat ways for customers to keep themselves on track with spending and as we all know, spending control leads to fulfillment of other financial goals.

Their research brought them to the same conclusion I had reached a long time ago and have been rattling on about to anyone who will listen for most of my career. Canadians are so overwhelmed by life in general that finances, especially those that aren’t exactly on fire, tend to fall by the wayside. Not dealing with finances adds to that crushing sensation of losing control.

Around and around on a dysfunctional merry-go-round, we go!

We’ve automated so much of our day-to-day spending that consciousness of our own financial management becomes nearly impossible. We don’t need to be totally aware of everything when it comes to managing our money; however, in my opinion, what we control and what we put on autopilot, should be reversed. For example, being conscious of paying down debt can actually be a bad thing, you’ll notice I said being conscious about it can be bad, not actually doing it.

The fact is many of us will hesitate to make larger than necessary repayments when we could, just in case we might need that money for something else. It’s our humanness in action. The feeling of not wanting to be separated from perceived security. That extra cushion of money sitting in our account makes us feel better but that’s all it does. On the other hand, we spend without coming up for air, which means that most of us couldn’t come up with an accurate total of a week’s spending off the top of our heads because we do it in an almost trance-like state.

I say that’s backwards! Spending should be conscious and controlled. We need a leash on it. If your clients don’t want to walk around with a “budget binder” recording every transaction, you need to help them find a way to see that day-to-day money is separated from their working cash flow. Debt repayment, investing and savings are the opposite. The less your clients have the opportunity to think about that from one month to the next, the less they are likely to sabotage themselves. Those items should run on autopilot. Clients should not have to decide to save, invest or pay down debt every month. Hesitation to do so is often expensive.

While how your clients manage their cash flow is not YOUR responsibility, I suggest you make it part of your practice before it becomes YOUR problem.

Now, if you aren’t a banker at RBC but you want your clients to have access to the same kind of tool, no problem. We have access to our own tool that we can use to work with our clients to understand and manage their cash flow and you can check it out at http://www.cashflowinsite.com.