A Great Financial Adviser Starts With Finding Problems

A businesswoman uses a magnifying glass to look at financial paperwork.

(Image credit: Getty Images)

published 31 July 2024

In the financial planning industry, professionals often find themselves navigating a complex landscape of client wants and needs, market trends and product offerings. Success in this field not only requires the ability to solve problems, but more importantly, it requires the ability to identify them in the first place. Problem-finding and problem-solving are distinct yet complementary skills that are critical in the financial planning profession for both advisers and clients.

This twofold capability is critical in ensuring that clients receive comprehensive, personalized and proactive financial guidance. In this article, we will explore why finding an adviser who is adept at problem-finding before problem-solving is essential for achieving your financial goals.

Problem-finding

Problem-finding involves recognizing and defining issues that may not be immediately apparent; therefore, they are hidden — sometimes knowingly, but most of the time unknowingly. It’s not uncommon for people who are looking for an adviser to lack clarity or transparency in what they want. Therefore, as an adviser, mastering the skill of problem-finding before problem-solving is crucial for the following three reasons.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Client wants/needs assessment. Financial advisers must be adept at uncovering their clients’ underlying wants, needs, concerns and short- vs. long-term goals. This is the most challenging of the three areas. It goes beyond the surface level of what clients explicitly state and involves asking probing questions without bias, observing behavior and understanding long-term financial goals.

A client may express interest in a high-yield investment product, but a skilled sales professional might identify that an underlying conservative approach is more appropriate given the client’s current situation and risk tolerance. This ensures that the client’s investment strategy is both intentional and aligned with their long-term financial goals.

Product suitability. Financial products are not one-size-fits-all. Problem-finding involves determining whether a particular product is suitable for a client’s unique situation. This requires a deep understanding of the product's features, benefits and potential drawbacks, combined with a clear understanding of the client’s wants, needs and goals.

A financial adviser who excels in problem-finding might identify that a client’s potential high tax burden contradicts their indicated goals of maximizing savings and minimizing unnecessary expenses. By recognizing this issue, the professional can proactively offer tax-efficient investment strategies and financial products that align with the client’s objectives, ensuring that their financial planning is intentional and aligned with their long-term aspirations.

Market analysis. Another aspect of problem-finding is identifying potential problems in the market. Financial professionals can anticipate issues that may affect their clients’ investments by staying informed about economic indicators, regulatory changes and industry trends.

Problem-solving

Once a problem is identified, the next step is problem-solving, which involves developing and implementing solutions. It should be noted that having only one product compromises the principle of problem-finding before problem-solving, as one-product professionals are akin to a carpenter with only a hammer. Therefore, all potential business looks like a nail.

Effective communication skills are critical to problem-finding and solving. Having the gift of gab is not effective communication. Effective communication means meeting clients where they are and emotionally connecting with them. Once a connection based on understanding is established — and this does not mean that you tell great stories about yourself — the professional can redirect the conversation to focus on solutions using conflict-resolution techniques.

A “what is right” approach can keep the conversation neutral and avoid a “who is right” dynamic. The redirecting process engages a teaching technique that delegates the solution to the client through a series of questions. By asking insightful questions, the professional assists the client in arriving at the solution, which enhances their understanding and commitment to the proposed plan.

Effective problem-solving requires tailoring solutions to fit clients’ specific wants and needs. Often, the challenge is discovering their true wants and needs, especially when clouded with confusing goals and contradictory investment strategies stemming from the client. The discover and disqualification processes provide a high probability that the financial professional will uncover the underlying problems, which will lead to appropriate solutions. It’s critical that the correct problems are solved.

1. Discover process

This involves in-depth conversations and assessments to understand the client’s true financial goals and priorities. By actively listening and asking the right questions, the professional can identify the core issues and objectives that may not be immediately apparent. It is paramount that the adviser learn the skill of listening without listening for anything.

A one-size-fits-all approach listens for certain cues on which to base their specific product.

A problem-finding approach listens neutrally and connects the often random answers with a clear set of goals and then solves.

2. Disqualification process

This is a two-part process. The first part invites the client to disqualify themselves. There are multiple kinds of clients one prefers to avoid having. For example, an uncooperative client unwilling to provide statements or information, an unrealistic client who expects high returns with minimal risk or the micromanaging client who challenges every move, suggestion or change in the market. Not everybody is an ideal client. Quality clients will not allow themselves to be disqualified.

The second part eliminates unsuitable options and strategies that do not align with the client’s genuine needs and risk tolerance. By filtering out these less appropriate choices, the professional can focus on solutions that are truly beneficial and aligned with the client’s values and long-term goals.

Financial professionals can provide comprehensive and intentional financial advice by mastering both problem-finding and problem-solving skills and by customizing solutions to address the correct problems. This approach ensures that clients receive personalized and proactive guidance, reinforcing their trust and confidence in the professional's expertise.

In financial planning, the ability to find problems before they arise is just as important as solving them. An adviser who excels in both areas provides comprehensive, proactive and personalized guidance, ensuring that clients are well-prepared to meet their financial goals. By prioritizing problem-finding and problem-solving, you can find an adviser who truly fits your needs and supports your journey to financial success.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Dr. Richard Himmer is a seasoned professional with expertise in Emotional Intelligence (EI), Clinical Hypnotherapy and Workplace Bullying prevention. He holds an MBA, a master’s degree in psychology and a PhD in Industrial and Organizational Psychology. He combines academic knowledge with practical experience. His doctoral dissertation focused on the Impact of Emotional Intelligence on Workplace Bullying, showcasing his commitment to understanding and addressing complex workplace dynamics. Dr. Himmer leverages the subconscious (EI) to facilitate internal healing, fostering healthy interpersonal relationships built on trust and respect.