To gain insight into a client’s spending habits, financial advisers employ various methods. One approach involves analyzing credit card statements and connecting their account to financial planning software, which tracks transactions and allows for monitoring of cash flow.
Additionally, advisers utilize quicker and easier ways to evaluate whether someone spends prudently or not. They ask smart questions, study the client’s daily routines, and observe their appearance and behavior.
Aligning Spending with Goals and Values
Mike Biggica, a San Francisco-based certified financial planner, aims to assist clients in aligning their spending with their stated goals and values. He reviews their significant purchases to gauge progress and poses the question, “How long did you take in deciding whether to buy that?”
It is common for impulsive purchases to be made using pre-loaded credit card information on a phone or website. By discussing intentions behind spending, insights can be gained regarding situations where unwanted spending occurs. This may include peer pressure to keep up with free-spending friends or neighbors by purchasing luxury items.
Examining Impulse Influence
Different approaches are used by advisers to assess how impulsivity affects a client’s spending habits. David Hunter, a certified financial planner in Palmyra, Pa., likes to inquire about the amount of research conducted when making significant spending decisions.
According to Hunter, if clients aren’t taking the time to slow down the process and carry out thorough research, it could indicate impulsive behavior.
Uncovering Spending Preferences
Sometimes, a simple question can provide a baseline for understanding a client’s spending preferences. For instance, when working with couples, Hunter asks, “What does Saturday night usually look like for you two?”
The response to this question reveals whether they tend to stay at home and watch Netflix or if they frequently dine out at nice restaurants, visit their beach house, or travel extensively.
Revealing Attitudes About Money
Exploring a client’s approach to car-buying and dining choices also sheds light on their attitude toward money. Those with a frugal mindset may take pride in infrequent car trade-ins, boasting about mileage milestones (“I’m at 150,000 miles and counting!”) or cost savings achieved through savvy supermarket shopping.
Getting to Know Your Clients
As a professional copywriter, it is essential to understand your clients to provide them with the best recommendations and services. Noah Damsky, a Los Angeles-based adviser, goes above and beyond by gathering specific details about his clients, including their car preferences. Damsky takes note of whether they buy or lease, as well as their preference for new or used vehicles. This information helps him tailor his recommendations to their needs and ensures they can follow through with his suggestions.
A person’s spending behavior can also be observed through their meal planning habits. Damsky pays attention to whether clients stick to a weekly routine of eating at home, which indicates a more mindful approach to spending.
To gain further insight into clients’ spending habits, Damsky examines their dining out schedule. Some individuals restrict restaurant visits to weekends and opt for home-cooked meals during the workweek. Others have no specific schedule and dine out whenever they please. In the latter case, Damsky advises adopting more discipline in food spending if it could benefit the client.
Establishing a budget and setting a monthly spending allowance is crucial. Advisers often recommend this approach to clients, monitoring whether they adhere to their predetermined withdrawal schedule. If irregular and unscheduled withdrawals occur frequently, such as random spending sprees, Aaron Schindler, a certified financial planner based in New York City, would investigate the underlying reasons behind the increased expenditures.
Occasionally, advisers can gather information about clients’ spending patterns without even asking direct questions. Damsky recalls an encounter where he noticed someone wearing a Rolex wristwatch. Upon subsequent meetings, he noticed the individual wearing different Rolexes each time. This observation speaks volumes about the person’s priorities and gives valuable insight into their financial habits.
More: Tracking the Right Numbers
While you diligently track your savings, spending, and investments, are you paying attention to the right metrics? Discover the key numbers you should be monitoring to ensure financial success.
Plus: Trust Your Gut Feeling
How much do you believe in the market? Sometimes, your instinct and intuition matter more than just the stocks and bonds you like. Explore how your gut feeling can play a crucial role in your financial decisions.