I often examine, what I refer to as parallel universes when seeking optimal methods to serve clients in dispensing advice. During this ever-evolving Covid challenge, many friends shared that they spend more time in their homes, personally and professionally, and as a result decide to renovate for many reasons. Families retain contractors for advice on potential expense expectations and vision. In a similar manner, they retain advisors for their financial plans and goals sought to be achieved.
Contractors review the existing structure to start, after obtaining a sense of the vision for hoped-for results. Many contractors review the home foundation and structural elements to begin. If they find significant issues in those areas, they begin to adjust (if not raise) expense allocations for budgeting. Advisors begin by learning about clients and their expectations/goals, along with examining existing portfolio structures. Building trust during this process for both contractors and advisors is key to establishing a sound foundation for the expectations sought and ultimate delivery of services.
From my own perspective, I found risk is an excellent place to learn about a client and their goals. Testing the levels of tolerance is a tricky science, if not bordering on art. I believe risk is a powerful place to begin to build the foundation for a trusted relationship. I also find it is often left in the background too long compared to return expectations. Having said that, I am pleased to read, hear and experience a significant and long overdue raise in the attention level advisors are paying to risk management.
