Much of this can be attributed to the pressures of modern living. But if people are also dealing with tricky personal issues, this might add to their financial distress. As a financial adviser, these are difficult areas to navigate with clients. However, according to Wayne Leggett, Principal with Paramount Financial Solutions, the fine line can be walked.
Focus on the financial problem
Leggett suggests focusing on the financial implications resulting from a client’s personal actions, rather than the underlying issues. It’s one thing to pick up on one tell-tale sign that a client might be going through a rough patch – but it’s quite another to be able to do anything about it
Signs to watch out for
“A client’s non-verbal signals may suggest that something’s not quite right,” says Leggett, “and that’s especially evident if a long-standing client is behaving out of character.”
Indicators of emotional stress leading to financial stress can include any notable lifestyle changes. These might include a cessation of planned holidays, spending that exceeds income, friction between family members, evidence partners aren’t talking, prolonged workplace absenteeism, difficulty paying bills, or a reluctance to be up-front and honest
Honesty is the best policy
In difficult circumstances, Leggett cautions against allowing the line between friend and client to be crossed.
It’s also important to lay all the issues on the table and address them as directly and early as possible. The financial circumstances of a client in personal distress can go downhill very quickly. Leggett’s advice to finance professionals is to gain a good, honest snapshot of a client’s circumstances as a matter of priority, and openly discuss it with them.
“You can ‘lean into’ these sorts of issues by asking if there’s anything compromising your ability to deliver what you’re there to do – namely provide value within the underlying financial advice.”
Recommend a budget review to see where discretionary spending could be tightened, and refer clients in need to counselling.
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Important: This article has been prepared without taking account of the objectives, financial or taxation situation or needs of any particular individual. Before acting on the information, you should consider its appropriateness to your circumstances and if necessary, seek appropriate professional advice. Any information used in this article is for illustrative purposes only. Wayne Leggett is not a member of the Commonwealth Bank of Australia Group of Companies (the Group) and the content or any view expressed by Wayne Leggett does not represent an endorsement, recommendation, guarantee or advice in regard to any matter. CBA, nor members of the Group accept any liability for losses or damage arising from any reliance on external parties their products, services and material. Past performance is no guarantee of future performance.