A Conversation With A Prospective Client

We (at High Rock) recently undertook a client survey with about 9 questions (quick and easy), mostly centered around our communications: blogs, monthly video, quarterly reports, semi-annual reviews). The lead-off question (above graph), however, was intended to affirm (or not) our view that most of our clients were thinking long-term in nature which came in at a pretty solid 97% (56% most concerned about meeting their Wealth Forecast (financial planning) goals, 41% most concerned about long-term Return On Investment (ROI)).

Me: So when it comes to your personal finances, what keeps you up at night?

PC (Prospective Client): Just making sure that I am going to have enough money.

Me: And what does that mean, to you, "having enough money"?

PC : A number of things, I suppose: being able to live financially independent, working at what we choose to work at, when we want to work at it. A good education for our kids, lots of travel, some philanthropy and something, in the end, left to our kids and some charities.

Me: Sounds like some pretty great goals. How far along are you with your plan? 

PC: We don't have any real plan, as yet, we have TFSA's, RRSP's, RESP's and some inheritance money in a savings account.

Me: A house? a mortgage?

PC: Yes. And I hate debt. I want to get that mortgage paid off as soon as possible.

Me: Absolutely! Debt can be a scary thing, especially when you are overwhelmed by it. What do you hate about debt?

PC: I guess it is just the way that I was brought up: debt was always frowned upon. 

Me: I guess interest rates were pretty high back in the 80's and 90's, carrying debt was a pretty expensive proposition. How do you feel when you see how low interest rates are now and the pretty significant amounts of household debt that Canadians have taken on?

PC: Higher interest rates frighten me.

Me: Sounds to me like it might be time to get down to the hard part and create a structured plan? We call it a Wealth Forecast. It is basically ground zero for all of the building blocks that you need for your investing strategy. When we understand exactly what you want to accomplish and over what period of time, we can then start to put together a long-term plan: what kind of portfolio growth you need, the kind of risk that may be necessary for you to endure and if you are comfortable with it.

Some years will be more difficult than others. Last year our balanced portfolios had small negative returns. This year they have, so far, bounced back nicely. However, we want to look at this in terms of decades, not years. Especially when you likely have more than four decades of life to go. Your plan has to take this into consideration, not every year will be at the average annual rate of return. We cannot control the economy and how financial markets might respond to it. We have to think in terms of what it takes to meet your long-term goals and the most efficient way to get to them: return for the risk taken,  taxation and the costs of investing.

Any idea of how much you are paying your current advisor and portfolio managers?

PC: We have a number of mutual funds in various accounts, our bank advisor looks after those. I am not sure what we pay.

Me: Do you think that might be worth looking into? 

PC: I tried to get her to show me, I didn't really understand it, but I didn't want to bother her more than necessary, she's pretty busy.

Me: I hear you. I bet it would be nice to have that made a little more transparent?

PC: I should pay closer attention, I think.

Me: Time to get down to the planning part?

PC: Let's do this!