FINANCIAL LIFE PLANNING

Mitch Anthony

It can be uncomfortable to look at a client’ s cash flow, but we ignore it at our peril.

“ The truth does not change according to our ability to stomach it.”— Flannery O’ Connor

REMEMBER HAVING AN INTERESTING CONVERSATION WITH AN AStute financial planner named Bryan who was lamenting the shortcomings of focusing on goals first in financial planning. He said,“ When we deal with clients on a goals-based approach without conducting extensive cash-flow analysis, we miss way too much of the real picture. I prefer to approach clients first and foremost on a cash-flow basis before we ever bring goals into the conversation.”

I think he’ s correct, and there’ s a disconnect here. For the past few years, I have been surveying all the advisors and planners in my speaking audiences( approximately 20,000-30,000 a year or so) and have asked each audience,“ How many of you are conducting cash-flow analysis with your clients?” Less than 5 % said they were.

When I asked advisors why they didn’ t pursue this practice more, I was met with two common answers: One is that clients really don’ t want to know what they’ re spending. They are living in ignorance— and for the time being, ignorance is bliss. The second answer was that when the advisor did provide a cash-flow analysis, the information was usually garbage in, garbage out— the client wasn’ t giving them accurate numbers, so the exercise was futile.

As a result, many advisors have given up on it. But that’ s a mistake if you truly want to help your clients make progress, and that means first benchmarking where a client is right now. You can’ t measure progress until you know, and can’ t build confidence on a false premise. There are reality checks you need to

Sometimes clients benefit most from the conversation they want to have the least. make with the client. And one of those is to remind them that their money is going somewhere.

Your Clients’ Habits

It’ s not just a client’ s financial status that an analysis of their cash flow exposes; it also reveals their regimen and habits— things that can either create wealth for them or erode it.

I heard one planner put it this way:“ Something we’ ve learned in our many years of financial advice is that a client’ s habits are more important than a client’ s assets. It is those habits that either create or erode wealth.” The planner uses that as a launching point with clients to ask them what those habits are, something you’ ll want to know, too.

In fact, what you learn from a client might change your mind about whether you really want to work with them.

Think of a doctor who is trying to keep you healthy. He or she doesn’ t cut conversations short after hearing about your current health behaviors. The good M. D. s inquire into your regimen and habits. They ask how much you work out, eat, drink, smoke, etc. A patient might lie to them, but the doctors don’ t stop asking— they just try to get a sense of who is telling the truth.

Here is a short list of the regimens and habits you’ ll want to be privy to as a financial advisor:

• Are the clients automating their savings and investments? How much hands-free saving is going on? The more, the better.

16 | FINANCIAL ADVISOR MAGAZINE | NOVEMBER 2025 WWW. FA-MAG. COM