The 5 Stages of the Client Journey

I have been on my own financial advisor journey for the last 20 years. I started after a 2-year stint at the Global Change Research Program in the federal government where we focused on why change was occurring from a scientific basis. Upon learning that I preferred humans over computers and entrepreneurship over government employment, I took the plunge and pursued my second college major in economics and landed in the financial planning space.

Over those years, I’ve had the opportunity to meet and work on thousands of households and businesses that struggle with making better decisions with respect to their finances. The theme that emerges is almost always the same. Humans go through an emotional journey that needs help at each stage to stay on the path. This happens regardless of financial acumen or interest, education, experience and even wealth. The truth is that when decisions are complex or there is a ‘high cost of being wrong’ humans want a credible outlet for confidence in their decision. Understanding that core emotional need is becoming more prevalent than ever. Information is everywhere and access to financial tools and services has the least barriers in the history of our established markets. And yet there seems to be an even greater need for guidance and leadership in the financial decision process.

Perhaps it’s the impending Boomer retirement wave that has people asking how they are going to consume and distribute the massive amount of qualified, real estate and small business wealth they’ve accumulated. This generation has by far more assets than any population estimated at $65T, but with the distinct disadvantage to their parents who had pension certainty and a shorter mortality. The very real fear that clipping coupon payments that worked for Dad won’t work in today’s interest rate environment. Add this to the unparalleled longevity and potential medical and long-term care expenses that are facing new retirees and there is no question that advice is in demand.

Or perhaps the reason guidance is more relevant than ever includes the GenX and Millennial populations who grew up with internet access in their formative years. With access to all the realtime information on the planet, they also lived through two major recessions brought on by speculation, and their general distrust of the markets with little financial education or good habits leaves lacking suitable guidance.

And this lack of leadership is showing up even in the protection markets as personal debt is at historical highs yet life insurance ownership is at historical lows. The shortage of education and policies intended to protect families shows that advice is sorely needed even when access to information is rampant.

While our industry continues to make exciting strides in the delivery and democratization of advice, it is important that we remember the emotional journey that customers experience. Making sure those in the guidance profession (whether automated, animated or something in-between), recognize that the journey towards better financial outcomes starts with making good decisions. With uncertain landscape ahead and no promises, it is only by building confidence through engagement and education that we can start taking steps toward a stronger financial situation.

Stage 1: Confusion

Many people come to professionals in our field confused. They know they need to make decisions about their money because it will impact their ability to live the lives they want, but they feel incapable of making those decisions on their own. 

The financial services business is complex and confusing, even for those of us who have been in it for extended period of cycles. With two major recessions and historical volatility and low interest rates, there are a lot of us that are in new territory.

Today there seem to be more financial vehicles than there are actual vehicles in the world. For many of us who are not in the car business, buying a new one can be overwhelming. So we do our best to select one with all the right features, safety, reviews, and price.

Sometimes we get it right and sometimes we don’t. Sometimes we just buy the same type of car our parents had because it seemed to do ok for them. Our car is a short-term investment. What we do with people’s money impacts every aspect of their lives, their kids’ lives, and their grandkids’ lives.

So imagine all the cars, trucks, and SUVs on the road. There are at least that many financial vehicles, investment funds, insurances, and other product choices available to our clients.

Our whole business exists because of confusion - people lack the education and confidence to make decisions in their best interests. When faced with too many options, people make bad decisions or no decisions. If there is a high cost of being wrong, they also avoid making any decision. The intersection of too many options and a high cost of being wrong yields a typical result - people look to someone else for help even if that person does not know more or have more experience. They want the emotional support. We often learn that the person responsible for providing more guidance on 401(k)s and elected benefits is the all-knowing colleague sitting in the next cubicle; “hey, what did you choose for the retirement plan?”. Clearly, people seek advice when they don’t have confidence and clearly we don’t know where to go for it.

Legacy planning, college planning, retirement planning, income distribution planning, estate planning, tax planning, etc. all fall into the category of having many options with a high cost of being wrong. They are all situations that people can’t do over. There is no “reset button” – no do over. It is critical for financial professionals to provide the confidence and support to our clients in this first stage and understand why they are looking to us for help.

Stage 2: Visual Clarity Promotes Honesty

The antidote to confusion is often simplification. When people reach out to meet with a financial professional, there is often an emotional urgency driver. That emotion can be overwhelming. Combining it with the stress of having very little training or education in financial literacy can be paralyzing. A financial professional’s mission is to help people start moving toward making better decisions.

I’ve found that the simplest place to start is with what people already have. While this can also be difficult thanks to 401(k)s from old jobs and accounts or policies sold to them from relatives at one time in the business, the truth is that most people just don’t know what they have. Sure, they know they have a house and a mortgage. They have a bank account and a credit card. They recognize they have some benefits from work and are expecting a salary or a bonus. But rarely do you see this organized in a way that helps them communicate it to others. I can’t tell you how many times a client shared a massive spreadsheet of all their stuff while their spouse or partner sitting next to them knew nothing. I’ve learned all too well that a single point of failure is a risky business situation. For most families it’s what’s in Dad’s head that is in some spreadsheet.

And so there is something magical that happens when clients are encouraged to put everything they have - all their financial instruments and decisions - onto one piece of paper, screen, or list. It makes decision-making much more manageable because suddenly everyone knows exactly what they have. 

This second stage of the client journey is no different from Spring Cleaning. If we were to go into our personal closets to clean and declutter, we choose to keep the things that are most important to us (maybe our house, IRA, life insurance, savings accounts) and get rid of things that we no longer serve us in our closet (haphazard, unintentional or value-less financial decisions).

Most people put it off in financial planning because their closet is full of stuff that they are too overwhelmed to unpack. It is our duty as financial professionals to help them make the decision to donate or exchange the financial equivalent of the pants that don’t fit from the 80s and keep their clothes that fit and are worn.

The human brain is designed to organize information visually or structurally. We must reveal the facts in that way helps our clients make better distinctions and become honest with the truth of the current state. When we complete a visual inventory of our clients’ finances, they become empowered with clarity to make better decisions or even resolutions. They can then take ownership of their situation and apply their own common sense. They can make space for things that are necessary or relevant for their financial well-being. Ultimately, seeing the truth laid out promotes self honesty and engages our common-sense brain to point out- “hey, this doesn’t fit does it? We’re missing this aren’t we? That’s all we have? I think it’s time to consolidate…”

Stage 3: Guided Interpretation

Advisors do best when they are empowered to help clients make decisions. The motto, “information is power,” is particularly true in financial services. As mentioned previously, there are many, many choices that can be made. Good advisors will not make recommendations until they understand the entire financial foundation on which they are building.

Clients’ financial structure is like a building. Each part is dependent on the other and influences the decisions around their viability. Many clients arrive with half-built, structurally unsound, or dysfunctional architecture. Perhaps they have four floors but no windows, two flights of stairs, and 5 kitchens. Yet the clients’ goals include having an three-story beach house with a green roof and a garage. This requires a completely different layout and design than the one currently in place. The building must be re-engineered, but unaware professionals may recommend adding a kitchen if they do not already know about the 5 already in place.

There is an extraordinary amount of information in the heads of advisors. Insurances, investments, legal requirements, and tax perspectives are all parts of creating sound financial plans. Professionals with CFP designations are expected to have an even greater understanding of how these things work together. In many ways today as we rely more on technology to give us indication of what to do. Hoping for an algorithm or chatbot to point out what needs attention is not necessarily the path that serves or customers of advice are looking for. I very much think that Advisors are the engine of advice, not an algorithm. In this stage it is critical that professionals pull together their collective insight and experience, their education and communication abilities to apply their personal A.I. Not artificial intelligence but rather Advisor Intelligence. Unlocking the competent advisor on a clear financial visualization of the facts is still unparalleled for helping to build confidence around financial decision-making.

This stage of the customer journey is all about education and transfer of knowledge. Most clients do not know that they have multiple financial products that all do the same thing. Or that their funds are conservative when they are ready for more risk. Or that they have no insurance to replace their income for their families if something unforeseen happens. Or that they need to have conversations with family members, accountants, business partners, or lawyers. Guiding clients through scenarios and recommending what they should have based on what they already have and where they want to go, is the best way to avoid returning to the confusing and disempowering state of Stage 1.

Stage 4: Tracking Priorities and Progress

There is no substitute for helping clients understand what they have, but they also need to understand what it means for them. That implies an understanding where clients are going and what their priorities are. Ideally advisors and their clients are going to be on a journey together for a long time. No relationship stands over time when priorities are unclear and so it is the responsibility of the professional to clearly understand and be choicely on priorities of their clients.

If you like to travel, as many of us do, you know that the point of a trip is to arrive somewhere. Funding college, retirement, or protecting against calamities is no different. There is a place clients want to be during and at the end of this journey. We must help them pack the right bags, create an itinerary for when they want to arrive, and have an idea of how they want to arrive. The same is true for finances. We all want our clients to have a net positive experience. To do that, we need to know what that means to them.

There are times when luggage gets lost and ends up in Dubai instead of Dubois. There are other times when weather, traffic or flat tires change our path. It’s inevitable. Our clients’ finances can also encounter a detour and something unfortunate happens. It is our job in this stage to predict the potential divergences and have a plan B when they happen, so we can react and ensure that they get where they’re going safe and sound.

If you’ve been in this profession for any duration, you know that priorities change over time. I liken it to the shirt I loved in high school. It was my favorite, but at this point I wouldn’t be caught in that shirt today. The truth is our perspective and desires do change over time and when making 30 year plans based on a destination in mind, we need to consider that our client’s interests may change by the time they arrive.

Because people’s priorities change, and it’s our job to change with them, we cannot depend on a 40-page turn-by-turn guidance list that is destined to be wrong. When we do, we send our clients right back to confusion in Stage 1. The truth is that progress towards goals is more important than performance. Helping our clients see that progress visually and message the actions needed right now is that most common sense approach to tracking priorities and progress. A map with the right information can provide context and insight if we revisit it often and use it for meaningful decision-making consistently.

Stage 5: New Ideas

Congratulations! We have made it to the final stage of the client journey. People have overcome their confusion, they have a clear view of their finances, they are making decisions based on guided interpretation, and they are more certain that they are headed in the right direction. You and your clients have come a long way.

Because financial professionals often operate without the full picture, many never earn the right to offer new ideas without feeling like a salesperson. The key is that when you have everything laid out, you have been given permission to show where other strategies and better decisions fit. If you do a good job of collecting all the data and analyzing along the way, your clients will likely be open to new suggestions without becoming overwhelmed and feeling intimidated by adding new components to their inventory.

Let’s go back to the closet metaphor. You have helped your clients open their cluttered and disorganized closets. You’ve laid everything out on the bed for them, and helped them select what to keep and what to throw away or donate. Now they’re hopeful in creating space for the items that serve them and creating confidence in gaps that need to be filled. With this increased confidence, clients start building better habits, they take care of their newly organized inventory, and they have you there to point out areas that continuously need improvement or completely evolve over time. By providing a framework for inventory oversight and tracking to priorities, you earn the right to bring ideas to the table that serve. Most of all, clients are engaged in the process and everyone is on the same page.

As financial professionals, we need to bring new ideas to the table once we have earned our clients’ trust and put them on a path that will help them make the most of their hard earned money. This is the fun part for most of us. When we guide our clients from confusion to clarity to action, we have earned the right to accompany them on a journey of the most meaningful decisions impacting their lives.

About the Author

Adam Holt is the president and founder of Asset-Map. He obtained his Bachelor of Science in Economics and Environmental Planning from Rutgers University in New Brunswick, an MBA from Drexel University, and a Certificate in Retirement Planning from Wharton School of Business at the University of Pennsylvania. He is also a CERTIFIED FINANCIAL PLANNER® and Chartered Financial Consultant®.