In The Press: American Funds Case Study

Earlier this month American Funds featured our firm as a case study for their article “How to fix your broken client questionnaire”. We are delighted to see the industry beginning to recognize that proper financial planning cannot take place without a process the revolves around the human aspects of our lives. Below is the case study from the article:

Some progressive RIAs, seeing the shortfalls in traditional questionnaires, are already retooling the process and looking for a better way.

WMBC, a Lake Forest, Calif.-based RIA with more than $100 million under management (60% in high net worth), for years gave clients a paper “Financial Planning Questionnaire” that asked standard questions. Those questions included asking about how clients would feel about their portfolios dropping in value, their investment time horizon and their past experiences with investment products. Advisors would use those questions to put an investor in, say, a “moderate” portfolio.

Over the years, WMBC realized the firm was doing more than just building portfolios and “those areas we focused on gave the clients much more satisfaction than their rate of return,” says David Coles, chief operating officer of WMBC. “We realized that we needed to create a process that brought these areas to the forefront of our work with the client and shift their mindset and ours to a broader view of their wealth.”

So while the questionnaire gave WMBC advisors insight into the clients’ feelings on market fluctuations, it didn’t explain the “why” driving the answers, Coles says. “Why could they only stomach a 10% loss? What other factors did they take into account when determining that answer?” he says.

So this year, WMBC along with behavioral professionals created a new questionnaire that addressed the client’s entire personal situation and even goes beyond money. The questionnaire probes clients’ emotions, health, external conditions and personal resources.

Questions are very different from what’s asked on a traditional questionnaire. It asks things like, “How much time spent discussing wealth with your family is stressful?” and “How much of the time do you find your job interesting?” Clients then answer questions on a Likert scale of one to 10.

After the client ranks their feelings toward the various topics, the firm summarizes the results for each aspect of wealth and life. “These scores are reviewed with the client to identify opportunities for change and offer direction to the advisor as to what financial system will bring about the client’s desired changes, not just the volatility range they think they want,” Coles says.

WMBC hopes to build out the system and make it available to other RIAs.

More advisors who follow suit and upgrade questionnaires so portfolios can be built to address goals, not just control for volatility, will likely find more satisfaction with clients, Statman says.

“The question really is, ‘What matters to you?’ These kinds of things will really guide you to the portfolios, not people’s attitudes towards risk,” Statman says. “Risk is like one of the cars of a train, but it’s not the engine of the train. The engine of the train is your aspirations.”

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Our mission is to help you use your wealth as a tool to build a life of fulfillment and security. Our Human Centric Wealth Planning™ ensures that your financial systems revolve around you, and not the other way around.

Company Updates | January 15, 2019 | WMBC

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