Let’s begin by looking at some advice from John Wesley…
Do all the good you can,
By all the means you can,
In all the ways you can,
To all the people you can,
For as long as you ever can.
Wow, that’s a lot of action! If you do this, what you will accomplish will amaze you. Ultimately, fulfillment in life comes from making a difference in other people’s lives. How? By helping people (in this case, your clients) make positive changes in their lives. Holding back and giving less than our best effort is never better than action. We as advisors are called to take action right now.
So how can we use the platforms we each have to impact lives? We must objectively help our clients understand and visualize the implications of their choices today. Sometimes this can be done through a simple story.
Years ago as I was presenting at an investment seminar, I was explaining what the rule of 72 was. I asked the audience this question: If a 25 year old is trying to decide whether or not to pay $10,000 today for a new car, (wish those days were still here) is it a $10,000 spending choice? Most of the hands in the audience went up in agreement that it was indeed a $10,000 choice. I went on to explain the long term implication of this choice using the rule of 72. The rule states that if you take the rate of return and divide it into 72, it will produce the number of years it will take to double your money. In this example, if our 25 year old could earn 8%, his money would double in 9 years. So how many doubles could he possibly have before he retires at 65? Well, moving forward every 9 years, we go from $10,000 to $20,000 at age 34, $40,000 at age 43, $80,000 at age 52 and $160,000 at age 61. Now I ask you, before that evening, how many of the people in the audience had really looked upon that $10,000 purchase today as a $160,000 choice? Right, not many.
Our client’s power to choose is a great power. Every choice they make impacts their lives.
We can equip our clients with the ability to make better, more deliberate choices is they learn to ask the following questions prior to making a choice:
- What is the long term financial impact on me and my family if I make this choice? (Remember the rule of 72)
- Is there a better alternative to chose?
- What do I need to do to position myself to…(ex: retire early, provide a college education for my children or travel the world)?
- What has to happen? (ex: save x number of dollars per month at x interest rate)
If we look at what we want our end result to be years from now and work backward, the choices become more obvious.
As financial advisors, we are commissioned with an enormous responsibility to be a positive outside force in our client’s life. If we help them make good choices, they can live a good life with the priceless gift…the peace of mind in knowing they have chosen wisely. – Mike Sciortino