Bendies for Spendies
This ‘know your client’ thing. You know, this whole thing about ensuring you’ve got all of your client’s information on the table – all transparent and out in the open. It’s great for your planning work (as long as it’s not just all the technical stuff and actually includes all the fantastic human stuff too). But what if things don’t quite add up? What if you suspect your client is hiding a cheeky pot somewhere? Sometimes, it’s okay to bend the rules….
Is your client hiding something?
The fact is, your compliance department (and the FCA) love to see that every penny is accounted for. So if you do a cash flow model and it doesn’t quite marry up to reality, there’s a temptation to sit your client down and interrogate them, “where’s the missing money?”
But sometimes, your client might not have declared absolutely all of the money that they have coming in. And even though it can make you feel super proud of yourself when you eventually find it, we don’t really want to have to interrogate our clients. What we really want to do is find out why they felt the need to hide some of their money in the first place.
Explore why they feel the need to hide some of their money
Nine times out of ten, you’ll find it’s all for a perfectly legit reason – and if we don’t find out what that reason is, we’re actually doing our clients a disservice.
Sometimes it’s because of something silly. Maybe they think they aren’t paying the proper tax on it and they see you a bit like the tax man – or they think you’re going to tell the tax man! Or sometimes it’s daft money that funds a secret habit that they might have.
It’s probably their independence money
Quite often, it’s what I call independence money. And for a particular generation, those born in the 50s and 60s who are nearing retirement age, it was very common for there to only be one wage earner in the house in the 1960s, 70s and 80s.
The household money was often managed and controlled by the partner who wasn’t bringing in the income. The point is, they often felt they didn’t have any money of their own – it was like they were always spending their partner’s sweat.
And when you’re spending someone else’s sweat, and you love them dearly, you want to be respectful. It makes you question the things that you want to buy – do you really need to buy it when you know it’ll mean spending money that someone else has sweated to earn?
So when the children leave home, the partner who wasn’t working often re-enters the workplace to earn money of their own. Eventually, there may even be a time when they don’t really need that extra money. So what’s the motivation? Why go back to work?
It’s guilt-free spending money
It’s interesting. If the need to go back to work isn’t financial, what is it? I’ll tell you what it is. It’s emotional. It’s about independence.
When you’ve got money of your own that you’ve sweated for yourself, it means you can spend it. You don’t have to justify it, or account for it to anyone else – even yourself. And your own guilt was probably always far greater than the guilt that anyone else piled on to you.
“Please don’t take my spendies away!”
So, why didn’t your client tell you about all of their income? Why did they hide some from you? I’ll tell you why. They were worried that you’d take it away from them. They’ve worked out that if they tell you about their little ‘spendies’ pot, you’ll put it in your fancy software and it’ll get lost – it might even end up getting allocated to a mortgage payment!
Your client wants to maintain control of it. So sometimes, it’s important to bend the rules a little bit so that they can keep their ‘spendies’ – think of it as ‘bendies for spendies’.
But that’s not all you need to do.
You need to champion ‘bendies for spendies’
It’s really important to let your client know that you’re more than happy to bend the rules a bit so that they can keep their spendies pot separate and protected. Even say to your client, “I totally understand why this is important to you. I understand that this money that you earn needs to go into your bank so that you can spend it on whatever you want. I’m not going to ask you for statements to justify what you spend it on!”
Celebate and champion it. Why? Because it helps your client to see that you understand and value their sense of control. The way I approach it is to create an account name called “spendies” – a totally separate thing. Even call it Sharon’s Spendies account. It’s untouchable. You don’t need to know what goes in or what it’s spent on. You’re acknowledging it’s there, simply to reassure Sharon. It’s protected.
It gives Sharon that sense of independence and control. It also helps to get your client on side – they are no longer fearful that you’re going to take that money away from them. In fact, you’re going to protect it and reinforce it. Who cares if the compliance officer or the Paraplanner doesn’t like it – you’re bending the rules for their spendies.
So, reassure your client that they can keep their spendies – what happens in the spendies account stays in the spendies account.
Ready to knock your clients socks off?
Signing up to the Plan Happy Lifestyle Financial Planning Academy is easy.
You’ll get instant access to a sample of the course content so you can get a feel for it.
It lasts for 30 days and you can upgrade to the full package at any time.
So, click the button below, and let’s get started!