Can my financial planner and advisor truly help me get what I really want? Is “sensitive” financial services the next big thing or just another sales gimmick in different clothing?

It seems like it came out of the blue, but the “sensitive” approach to personal financial services has been boiling under the surface for several years. It now has exploded on the scene to be perhaps the most radical change in financial services since personal financial planning became a legitimate profession two decades ago.

1. “Sensitive Financial Services” defined
Sensitive Financial Services (also called “SFS”) are personal financial advisory and planning services which are provided to clients in a manner that is openly very sensitive to the client’s feelings, needs, goals, temperament, past experiences, emotional and family issues, values, philosophies about life and financial context. Compared to traditional services, sensitive financial services have a greater likelihood of satisfying the client’s innermost desires, including goals which are not apparently money-related. Clients often attain a higher level of peace, security, balance and self-expression. In brief, they get happier. Providers of sensitive financial services (also called “sensitive advisors”) usually have a never ending supply of qualified clients. Such advisors recognize that a client’s feelings are not necessarily right or wrong, and that these feelings often run a person more than their intellect. The heart often rules the head. Often, the advisor and the client reach an understanding of the feelings-based thinking and behavior, and then progress to either surmount it or work within its context. SFS is not for every client. Also, it takes special temperament, skills and experience to be a sensitive advisor.

2. How are “SFS” different from traditional services
Sensitive financial services (“SFS”) have many practices similar to more traditional services including comprehensive financial planning, estate planning, retirement planning, and investment and insurance services, but there are certain key differences. For SFS, unlike predecessors:
- The consumer usually initiates the request for help. Rarely does the provider solicit clients, primarily due to a very high demand.
- All facets of personal finance are considered, not just a narrow band
- Family relationships are center stage instead for mere context
- Time-efficiency and simplification have veto power
- Money is quantified in order to measure its influence
- Fees and other costs to the consumer are often based on “extra money” realized by the consumer as a result of implementing certain strategies
- The performance of investments is a factor but plays a minor role
- Consumers sometimes experience an emotional and psychological breakthrough as a result of the process. Emotion-based obstacles often get overcome.

Art vs. science
Traditional services look more like science. The recommendations from the advisor often are universal and applied in a wholesale fashion. Input from other advisors is rare. The advisor usually pushes strategies on the client. The process is businesslike and detached; something necessary which appeals to the mind.

Sensitive services look more like art. The recommendations from the sensitive advisor often are very personalized and applied to one unique client. Recommended strategies vary greatly from client to client, even those with what appear to be similar characteristics. Other advisors are often consulted. The advisor and client work together in a joint effort. The process is enjoyed by the clients , lifts the spirits, feels good, and appeals to the heart and soul, as well as the mind.

3. Here are some examples of why Sensitive Financial Services eliminates problems often associated with traditional services.

1. A sensitive advisor probes deeply when a client has significant concerns about safety and security, and will develop an investment allocation which is truly more stable and contains a larger amount of principal-assured investments, like bonds or principal-protected equity investments.

2. When the advisor is very sensitive to a client’s desire to remain in control, the advisor will often suggest an estate plan whereby a smaller amount of their estate is given away during their lifetime, even though the future estate taxes might be quite substantial.

3. In cases when the client is not easily trusting, the sensitive advisor builds trust gradually, implementing strategies in stages with a high level of disclosure so that the client always feels in control and understood.

4. For a client who feels a great weight of responsibility for their elderly parents, a sensitive advisor could empower the client to get siblings motivated to all share the expenses of long-term care policies which ordinarily might be shunned due to limited resources of the parents.

5. A sensitive advisor recognizes when a client has limited financial knowledge and then creates simpler strategies even if they result in less financial gain, and the advisor spends more time explaining in order to gradually enhance the client’s knowledge. Then the advisor builds more complicated strategies as the client’s knowledge and comfort level increases, and reviews progress with the client more frequently to help the client understand cause and effect relationships of financial transactions.

6. A client who is obsessive about details and organization is handled by a sensitive advisor much differently than a client who is more laid back. The sensitive advisor will provide more information to support or corroborate strategies, often including very detailed projections of cash flow and investment growth. In many cases, several what-if scenarios are developed. Additionally, the ongoing relationship with the client is usually more hands-on. Sometimes, the high level of client involvement in the details necessitates that the framework be established at a simpler level at the outset to keep advisory time and fees to a minimum.

7. A sensitive advisor recognizes when a client is driven to be efficient with time and with money. The advisor should continually check with the client on ways to streamline financial affairs and to streamline the advisor’s services. Sometimes, a client will forsake many thousands of dollars in potential extra money from a complicated strategy because it will take too much time or fees to implement, even if a significant net benefit. The sensitive advisor must recognize these situations and handle them with the client, either overcoming concerns through open discussions or not proceeding at the client’s request.

The most significant developments and the related trends leading to the emergence of Sensitive Services are the following:

1. Stultifying information
Computerization and the internet has bestowed wondrous gifts on us. We can be more efficient with mundane tasks and spend the saved time of more humanistic and spiritual endeavors. However, too often we fill our time with other mundane tasks and leisure activities which leave us unsatisfied. But for sure, the easy access to so much information, through a search engine on the web or by clicking away at the TV remote device, or the scan button on our car radio, we do not get more secure but less so. In fact, we get frazzled and fried. It is tougher to make a decision because we feel guilty if we do not check at least five sources where one was fine in the good old days. And to save $20, we will go to extremes often spending hours. Our trust of specialists is reduced because we trivialize the importance of the knowledge they have, since a search engine like Google gives us hundred times as much for free, and at three in the morning if we want.

The information revolution has brought great benefits, but for us individuals seeking financial well-being, it has only confused matters. Financial advisors have gotten carried away with the info explosion too. If you have stock options to sell, the typical advisor will recommend running the numbers with tax impacts 10 ways to Sunday. If you are thinking about evaluating your investments’ performance and voice it to a caring financial advisor, then before you know it you are knee deep in Morningstar mutual funds and stock reports, prospectuses, mounds of data on alternative investments such as 17 different money managers, news articles from far-out mags, etc. We’ve all got caught up in the info bubble which is now bursting.

2. Stressed-out baby-boomers
For an 18-year old in the Summer of ‘67, like me, the summer of love was exhilarating and the future was rich with promise. Let’s face it boomers, most of us still haven’t found what we’re looking for. Those of us who had kids later, now have teenagers who are driving us crazy with their rebellious attitudes and blatant contempt for authority, namely us, with no let up in sight. Do the 2 million kids on prescription antidepressants like Ritalin really have Attention Deficit Disorder or do parents and children find drugs the only path to cope. Those baby boomers with children in college are up to their eyeballs in education expenses,often paying with home-equity funds. Those boomers with children out of college are sometimes supplementing their children’s income or still providing them with a place to sleep. Making matters worse for many baby-boomers, also called the Sandwich Generation, is that there are parents and sometimes grandparents needing help in their retirement years. Who cares if you can afford a pleasure craft because there just is not an hour to spare to even take it out into the harbor! And the 3-day get-away weekends just do not do enough to expunge the stress.

3. Prolonged lives and their meaning
There is a growing trend of people seeking more meaning and spirituality in their lives. One causative factor is a greater awareness of the preciousness of life and to live it as fully as possible now. We have been seeing people around us live into their 90s and 100s. Some age gracefully, some with major medical problems, and some kept alive artificially. Also, thanks to the shrinking world and globalization of media, we are reminded of lives cut short around the world due to disease, poverty, war, and natural catastrophe. Barraged continually by these images and messages, we cannot help but believe it is important to treat life as quite precious, and to live it fully, and live it now. We are driven to live it fully because we may live to 120, God willing, and who wants to be stuck in a dead-end job for the next 70 years. Also, we want to live fully because we may die next year and what a shame to have wasted so much time not doing what had always been our passion.

Another reason for the additional emphasis on life’s meaning and importance is that the idealistic generation of the 1960s, the baby boomers, are now in middle age and have the resources, sheer numbers, and influence that can shape the world. With this power comes a feeling of responsibility to do meaningful things. The men’s weekend retreat I attended last January was emblematic of this trend. Forty men, most in their forties and fifties, in a mutual quest for truth, shared life stories with each other, openly, and often quite emotionally.

4. Feminization of money
Women have become, if they were not already, the main financial decision maker. It is true that the man might open the discount brokerage online trading account, but it is often the woman who calls the shots on major purchases like cars, homes, home improvements, retirement plan investments, which college for the child, etc. In the last 30 years, women have taken a much greater role in family financial planning. In addition, women on average live much longer than men, and women head up more single-parent families and thus are forced into being the decision makers. This may account for the fact that many financial advisors, myself included, serve more women than men. In divorced or separated situations, women have had to retool, become better income earners, and be more diligent in getting the estranged husband to pay his share. Watch 50 television commercials and skim through 10 general interest magazines and newspapers and you will see who are being appealed to - it’s the women. In my financial planning sessions with couples over the years, I find women participate much more actively and often contribute the greatest insights.

5. The individual is better than the group
Hurray for the entrepreneur! So many deca-millionaires and billionaires have been created by the entrepreneurial boom and by the internet revolution, giving more ammunition to the argument that true innovation comes from small packages not big. As the individual start-up man or woman takes their risks and are successful, more people join the crowd and shun the status quo, and then big emulates small and the related benefits for flexibility and growth. However this sometimes leads to an unfortunate bubble but for now seems to lead to greater prosperity for all. This focus on the individual has been brewing for decades and not just in the business arena. Positive developments in the movements for more equal rights for races, religions, genders and nationalities has fostered a greater appreciation for the individual, no matter how different from the group. In fact, many firms now seek out unique individuals because of the greater insights which a diverse group often brings to the mix. Many years ago the slogan was to “Adapt or perish” and now more and more it is “Viva la difference!”

1. Personal
You cannot find Sensitive Advisors in planning departments of the leading wirehouse brokerage firms, nor in separate kiosks at the neighborhood bank. You will not find ads for seminars in the papers nor will you get an invitation in the mail. The mutual fund companies will not be mailing you a Sensitive Financial Services Compact disk or tout the best website to do Sensitive Financial Services online. Why not? Because SFS cannot be done efficiently by large organizations. It takes an individual have at least most of the 12 traits listed below, and those individuals are usually not working for such large organizations. They usually work on their own or in very small groups, sometimes partnerships and sometimes associations.

2. Caring vs. knowing
You’ve heard the expression “People don’t really care how much you know, but they really know how much you care.” For us in the financial services industry, if we are to maintain the trust of clients we already have, and gain the trust of new clients, we must pay more attention to how much we care versus how much we know. If we do not genuinely care, we should find other work, and quickly before we do damage. If we do genuinely care, we need to continually demonstrate it by providing great service tailored to the particular client. We must see the financial planning and advisory function as a process of distilling the enormous array of products and services into a manageable set which relate to the client’s unique situation and then keep shaping it as the client changes in the ever-changing world around them. Wherever we lack skills, we must get them or network with others who do have them. We are more than change agents, helping clients cope with change. We are also change portals - channels through which the clients can see their future and step into it.

3. Profile of the sensitive advisor

The people getting the most recognition as Sensitive Advisors seem to fit the following profile:
1. Caring
1. Experienced in several facets of financial services (e.g. was a stock broker and insurance agent, was a full-time CPA or attorney or start-up incubator manager with a yen for personal financial services) and experienced in several facets of other industries, providing sharp financial acumen, learned in the trenches where the knowledge sticks
2. Passionate about serving people as individuals
3. Female or male with a keen awareness of female aspirations and attitudes and comfortable in female company as well as in male company
4. Seasoned with life experiences to draw from. Age-wise this often means 45 or older
5. Successful financially in the overall, but with several failures which led to greater appreciation for risk and understanding of complexities
6. Very creative and innovative, often bringing new perspectives to the issues
7. Networked well, knowing many people she can call on to get their knowledge and opinions
8. Impatient with bureaucracy but tolerant of it until changed
9. Glass half-full vs. half-empty
10. Excellent at communication and spurring discussions of important issues
11. Solid citizen with good character and community-minded
12. Leadership strengths to be a quarterback, marshaling the services of other professionals

Research shows that decision-making about financial services has many aspects in common with decision-making about other endeavors and activities in life. Thus, if the provider of financial services is sensitive to these attributes, and tailors financial services and products accordingly, then there is a much greater likelihood that the they will indeed meet with success and that the client will benefit.

These are the 11 key attributes of sensitivity of clients which impact significantly on SFS:
1. Secure and safe
2. Free and not burdened or controlled
3. Not left out and in-the-know
4. Not taken advantage of
5. Understood
6. Respected as an individual
7. Efficient
8. Responsible and not too risky
9. Young at heart, fresh, innovative
10. Successful financially and successful life-wise
11. Loving, harmonious, spiritual, and not controversial

All clients have these attributes, but the prioritization greatly differs with each individual and is impacted very differently by the scores of aspects of financial services. For example, one client might feel she is being responsible by saving 20% of her salary for her 12-year-old daughter’s future college education by investing in a mutual fund of large capitalization stocks, whereas another client would feel responsible only if the money was invested in bank certificates deposit. Because empirical evidence about market volatility could be interpreted to support either view, it is important for the advisor to appreciate the client perceptions and help shape them into an actionable plan in line with client feelings. Another example is that one client might feel he is more loving and considerate about his children by setting aside money into irrevocable trusts for their benefit so that future estate taxes could be reduced and that more money will be available for them. Another client might see the situation completely differently and believe the children should not get large inheritances which might spoil them and cause them to be less high-achieving and entrepreneurial in their lives.

The Sensitive Advisor not only must be mindful of these attributes as they show up in their clients but also be mindful of how the advisor’s attributes show up for the client, affecting the process. Often the greater the alignment of attributes, the greater the success of the relationship.

1. The main phases are simple:
1. The first contact is through a referral from the prospect to the sensitive advisor
2. Setting the context
3. Building rapport and developing understanding
4. Identifying real needs and goals
5. Creation of financial strategies, holistically and sensitively
6. Implementation of key strategies
7. Follow-up, empowerment, referral

For each phase, the sensitive advisor gathers information about the client’s 11 sensitivity attributes, and what influences them most. Completing specially-designed questionnaires is one way to get information about the attributes and their ranking of importance for the client. Throughout the process, another important way for the advisor and the client to communicate is through the telling of stories and of their views about matters of the day, always protecting the confidentiality and anonymity of the parties involved. The advisor should tell stories of cases where the client’s lives were impacted significantly and how it happened. The client should tell stories about their own lives, successes and failures, and stories about the lives of others they respect and emulate and of those who they do not.

2. Details about each phase

1. The first contact is through a referral from the prospect to the provider
Providers of Sensitive Financial Services make it a practice not to actively solicit new business through conventional means of seminars, mailings, radio, internet, letter-writing or calling. Instead, such providers rely on satisfied clients to spread the word of their satisfaction with SFS to their family, friends, business associates etc. who will then call or write to the providers if interested. In this way, the providers can focus on doing their work rather than marketing which is really unnecessary due to the very high success rate of converting an interested prospect to a paying client, due to the referral basis.

2. Setting the context
At the outset, there must be frank discussions between clients and providers about the expectations, steps in the process, time and cost considerations, reasonable short-term and long-term goals. Here are examples of the detailed steps:

a. Family tree - Clients and advisors complete this chart together, discussing relationships, the financial resources of family members, the expectations of responsibilities, the quirks as well as successes of family members, etc. As the chart is built, the uniqueness of the client’s situation becomes apparent. Many financial strategies are identified during this step. Often the conversations cross into the other areas mentioned below. The advisor is mainly a listener, asking open-ended questions to trigger deeper discussions. (e.g. Tell me about how your father with a limited income was able to provide for you and your siblings and pay for all your education through college. How did your mother or your father approach big money decisions?)

b. Explore past - Many clients have strong views about certain money issues as a result of past experiences (e.g. lost money in a business, gambling problem of a relative, cousin who hit it rich with an IPO, etc.). Discussing the past helps everyone see what is driving the present and help distinguish what is real and what is drama, and what is steadfast and what is changeable.

c. Map future - Discussions of the future need to be as visual and specific as possible. For a vibrant 40-year-old successful English professor, writing and publishing short-stories during retirement is a more realistic goal than just playing golf. If so, perhaps a small income can be assumed during retirement that augments investment income and social security.

d. Focus on key strategies - Establish what is most important. Develop a list of the 4 or 5 essential issues to resolve, and discuss tentatively sample strategies to deal with these issues, evaluating sensitivity attributes.

e. Discuss key elements of the process - There must be a clear discussion of fees (and the type of fee structure such as value-based fees), the steps to gather information (including completion of various forms and questionnaires, schedules of expenses, assets and cash flow), the methods of reporting results, the use of computers and the internet, the advisor’s network of associates and clients and the client’s network of other advisors such as attorney, insurance agent, investment broker and accountant.

3. Building rapport and developing understanding
If there is not chemistry, mutual respect and a clear appreciation and trust of each other after the first meeting, it is strongly suggested that the advisor and client should openly discuss this matter, and if there is not resolution immediately, then the process should not go forward, and the advisor should not accept the engagement. If the process does move forward, it is important for both the advisor and the client to take steps to bolster the rapport and understanding, such as additional meetings, phone calls and emails, clarifying discussions, sharing of stories, and attending certain dinners or events together. For example, the way a client reacts to a waitress serving her during a dinner can speak volumes about the client’s consideration of others, expectations, self-centeredness, etc. Likewise, the client should note that an advisor who knows no one at a professional gathering is probably not well networked, and this can spell limitations of financial strategies. The process is helped when the advisor and the client take part in conferences (e.g. conference phone calls) with other advisors such as CPAs, attorneys, insurance agents, etc. and with other family members. Of course, attending events such as plays, movies, sports, etc. can further the relationship; however these events should not be too frequent which could cause a blurring of the client/advisor relationship and a fostering of a relationship that is too cozy and comfortable, making it difficult for either party to stand ground when needed.

Because sensitive advisors usually get more involved with more emotional and psychological aspects of a client’s life, there are often more matters for which a client requests the sensitive advisor’s help. Sensitive advisors must be careful not to get so involved as to taint the advisor’s objectivity or render the client over-reliant.

4. Identifying real needs and goals
It is one thing for a client to express a goal like retiring at age 60. It is another thing to delve deeper to find out why at age 60, what is there planned after age 60, will there be sufficient resources to make it happen, what will the spouse be doing, does the client have hobbies or other interests to occupy time, etc. Often it is important to prepare a detailed projection of cash flows and investment growth (e.g. using electronic spreadsheets going out many years) in order to test and refine the goals. Looking ahead to identify other events that might impact the goals is an important step in the process. For example, children may be getting married, parents might die or get ill in advanced years possibly leading to more or less money, income might not grow as quickly, a mortgage might get paid off, etc. Once the needs and goals are discussed, evaluate them in terms of the 11 sensitivity attributes, and refine them again. For example, a client who wants to be in control might not really be able to handle emotionally the downsizing of a house and move into a retirement community.

5. Creation of financial strategies, holistically and sensitively
The sensitive advisor must have the skills and experience to survey the information obtained in a holistic manner and then create the best few financial strategies which can help the client achieve their goals and satisfy their needs. The advisor must be sensitive to the client’s attributes in developing the strategies. For example if the client is not very analytical and prefers broad concepts, the advisor should not inundate the client with detailed analysis but rather summarize it clearly for the client, perhaps not even sharing the analytical methods used, whereas for another client who might like analysis, the advisor might walk through all the analytical steps, sharpening the strategy with the client’s input. If the client is loathe to spending current cash flow on insurance like long-term care insurance, the advisor might propose that the client pay premiums by using the build-up within tax-deferred annuities which are in excess of future needs. This could save future estate taxes and also future income taxes, by paying taxes at the present income tax bracket rather than the beneficiary such as a high-earning adult child paying taxes at a much higher rate.

As part of the creation process, the advisor should review all typical strategies, decide which ones are the most worthwhile and then determine ways to creatively combine them or enhance them. The advisor should refer to manuals and check-lists for traditional strategies, supplemented by strategies discussed in publications and the media. The advisor should also use financial websites and search engines to explore potential strategies.

The advisor should look for opportunities to simplify the client’s life, and sometimes zero-basing in this regard helps. For example, let’s suppose that stagnant low salary income is interfering with the client’s ability to save for retirement. Instead of recommending that she drastically cut personal expenses which could be disempowering, the sensitive advisor might suggest that the client should seriously consider her own business, using some of her invested money for start-up capital, assuming the risks when reviewed are not significant (e.g. the client has very good skills, great network of potential customers, solid business plan, etc.)

The advisor should request colleagues to review the basic information and findings to see if additional strategies can be created. Each strategy should be evaluated in terms of the client’s sensitivity attributes, and if helpful ranked from 1 to 5 on a grid.

6. Implementation of key strategies
The advisor’s role in the implementation should depend not only on the advisor’s skills, licenses and powers, but also should depend on the client’s sensitivity attributes. For example, an advisor who can easily implement investment allocation recommendations by purchasing and selling securities should not do so if the client is the type of person to question the advisor’s objectivity even if the advisor is very objective in reality. Also, the advisor must be sensitive that some clients want to have a very involved role in implementing strategies and using their existing network as much as possible, while other clients may want one person, the advisor, be responsible for everything. Of course other key areas of sensitivity involve the matter of time (e.g. implement all strategies right away, or do gradually) and money (e.g. each client will view the advisor’s compensation, the amount and type, differently). In some cases, the advisor might be able to reshape the client’s views and feelings, but usually not. Thus, the advisor is often better off identifying the sensitivities and adjusting her ways of doing business, or else run the risk of a client being dissatisfied over one point, spoiling the entire batch.

7. Follow-up, empowerment, referral
Client relationships can be lifelong with the right follow-up which can keep the client empowered to continue the improvement of their financial health and attainment of goals and objectives. Look again at the 11 attributes of sensitivity. Efficient cost-conscious self-starting clients will probably want an expeditious schedule of follow-up, perhaps quick reports and discussions on a semi-annual basis. Other clients who want to be more in control of the information and perhaps are less trusting of the overall plan will want more frequent follow-up, and perhaps in greater depth. Those clients who closely intertwine life and money may desire the advisor’s involvement in many endeavors and events throughout the year, planning often to make the life event as rich and meaningful as possible. For example, a client evaluating the purchase of a new house may involve the advisor not only to advise on lending and tax implications but also on the other implications on one’s life (e.g. on family, on cash flow, on school selection, on future needs) of buying an expensive home requiring high maintenance situated far from one’s employment.

Finally, some clients will easily refer friends, associates and relatives to the advisor, and other clients will shun such referrals, often having little to do with the degree of excellence of the advisor’s services and more to do with the client’s feelings and attributes. Yet, there will usually be many more referrals when an advisor uses the sensitive approach to financial services. It is more likely that the feelings that might have been obstacles to a referral get a chance to be seen by both the client and advisor, addressed by them in an ever-growing mutually-respectful relationship that is often seen as emblematic of each other’s life mission, which is to grow as a good person, serving others to the benefit of all. The client gets an opportunity to serve the advisor by making a referral, and the referred person becomes an eager open new client for the advisor to continue his or her mission to serve, and to serve in a sensitive manner.