Taking client concerns down to the core question
Putting today’s concerns into an existential answer
Many of the concerns and questions that Carney is hearing now stem from the ‘good problem’ of strong market returns and unanticipated wealth. With many of his older baby boomer clients now wealthier than they had anticipated at this juncture, they’re seeking outlets for that excess capital. Sometimes that’s a lifestyle change: increasing monthly income or taking a few extra trips during their ‘go-go’ years. Sometimes it’s a gift for the next generation, helping kids with a downpayment or grandkids with education expenses. In those cases, Carney says that it’s his job to show his clients what’s possible and what those possibilities might mean for their overall financial and wealth plans.
Other concerns that Carney hears are more tied to existential areas of worry than opportunities for newly-won wealth. Inflation has become a growing area of client concern since the end of the COVID-19 pandemic, forcing a reassessment of assumptions in financial plans. By quantifying higher inflation assumptions in the plan, however, he can help show clients that even at a higher persistent rate of inflation they can still be okay.
Longevity is also a growing area of concern, with Canadians living longer and requiring more expensive healthcare later in life. Carney says that some of his clients have seen their parents become centenarians and they’re asking if their plan accounts for a longer lifespan than they anticipated. He notes that in addition to remodelling financial plans to account for higher inflation, his team has revised client longevity estimates past age 90.
Clients will also raise concerns about the state of the markets today, which Carney says are often informed by the news they consume. They might come to him asking if AI is a bubble or if stocks are currently overvalued. While he engages on those points, he ensures that all his answers to client questions remain rooted in their plans and their personal expectations. He can show them just how an AI bubble bursting would impact their portfolio, and why the portfolio is constructed with a view that downturns are an inevitable feature of investing. Tempting as it might be to get into the weeds on P/E multiples and earnings reports, he makes sure that any market conversation begins and ends with that client’s plan.
A process for plan-based reassurance
Carney believes that when advisors face questions and concerns from their clients, the rush to reassure can open them up to oversights and mistakes. Just telling a client that they can take an extra vacation each year or pay off their child’s mortgage might feel good, but Carney says advisors must ensure they are clear with clients about what those decisions mean for their plan. Even if it doesn’t change the fundamental answer to ‘will I be okay,’ Carney will show clients exactly what different decisions will mean for their net worth, their expected returns, and their total portfolios each year.
