The ABCs of cash flow planning: O is for Ostracized

Every week, we look at the ABCs of cash flow management.

O is for Ostracized

It could be hard for your client to follow her cash flow plan around friends and family.

Unless you show her how to explain why she’s managing her cash flow and how it works, she could quickly feel ostracized if others scrutinize her approach and your advice.

Read: The ABCs of cash flow planning: J is for Judgment

Advisors may not expect pushback from a client’s connections since people react differently when they hear about traditional financial planning. It’s common for people to work with planners, and investors don’t need to share that they’ve bought a new mutual fund or insurance policy with anyone other than immediate family members.

While your client’s managing her cash flow, however, she may have to dramatically change how she spends her money and lives her life. If her friends and family have expectations of what she should do with her money, she’ll have to stand by your cash flow plan.

Read: Turn clients into star savers

Below are two ways you can help your client accomplish her goals without having to struggle with peer pressure.

• Prepare her for conflict. Offer to walk your client through a normal situation where friends are pressuring her to go off-plan and spend. She might be asked to go on an expensive trip, for instance, or be expected to order a bottle of wine at dinner or pick up the tab. Take on the role of her friends and work through the scenario during a meeting.
• Help her explain her plan. Once you hear how she’d respond to conflict naturally, determine whether she needs to better shape her responses. She might be tempted to simply say she’s on a budget or become defensive, but the following response would be better: “We’ve rearranged our financial priorities and are focusing on saving for our trip to [insert name of awesome tropical destination].”

Read: The ABCs of cash flow planning: M is for Motive

It’s much easier for clients to follow cash flow plans when they can effectively resist temptation. Another benefit of making sure people can explain their cash flow plans is you can pick up referrals—if your clients’ friends hear about her plan and that she’s achieving her goals, they may become prospects.

Continue on to letter P.

Also read:

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Most worried about retirement

3 approaches to prospecting

Be empathetic to win over clients

Grapple with challenging circumstances

Are you networking enough?

How to lose referrals