Building Better Relationships with your Clients as a Counselor versus a Transactional Advisor

A older white man sits looking out a window with a tablet in his hand, acting as a financial advisor and counselor

How can you reframe your client conversations from transactional focus to acting as a trusted advisor and partner to your clients?

If you have been in this industry long enough, you will get that call from one of your clients informing you that they have money to invest.  Let’s look at an example: the client, Joan, is 65 years old and has $200,000 to invest in her retirement. She is trying to figure out how to invest in her retirement. Most advisors will want to show how much they know. They will tell Joan that she can put it in a mutual fund or a variable annuity.  If Joan is averse to losing principle, they may recommend looking at a MYGA or Fixed Indexed annuity.  This inquiry from your client is an opportunity to be a counselor and ask Joan a question or two rather than act as a transactional advisor.

An alternative conversation as Financial Advisor turned Counselor

Acting as a financial advisor and counselor to your clients is simply a re-frame of the conversation focusing on your client rather than the product. You may investigate client concerns and either validate or invalidate these concerns with analysis, supporting recommendations, and building a strategy for future planning together.  A possible response to Joan’s initial inquiry acting as a counselor could be:

“Joan that is great news. Before I can give a recommendation let me ask you a question or two.  I know last time we spoke you mentioned that you were planning on retiring in a few years.  Are you concerned about running out of money? Do you have any other additional concerns surrounding your retirement?”

By reframing this conversation making it less about what you can do and more about your client needs, you can learn more about your client and shift from being a transactional advisor.

Continuing the Conversation – Cash Flow Analysis

Joan has intimated to you that she is concerned about having enough money in retirement.  She also said that she would like to retire as soon as possible.  This is an opportunity to conduct a cash flow analysis with your clients.

Example of Cash Flow Analysis from the Counselor approach

In your conversation with Joan, you elaborate on the expenses that should be noted in a Cash Flow Analysis: Essential and Discretionary.

  • Essential expenses are those that will always be there for the rest of her life. Examples of this are her phone bill, electricity bill, food etc.
  • Discretionary bills are those that are more for play and can be adjusted as needed.Examples of this would be going out to dinner, taking trips and possibly that country club membership.

By answering Joan’s initial inquiry with questions of your own, as a counselor rather than a transactional advisor, you have empowered Joan and future clients to analyze and take control of finances and understand how she can retire financially independent and happy.

The Completed Cash Flow Analysis – Empowering Your Client

To continue our example, Joan sends you back the Cash Flow Analysis worksheet completed.  She has told you that she is eagerly waiting for you to analyze it and give her some direction on what she should do.  Here is a very high-level breakdown of the conclusions from Joan’s completed worksheet:

  • Total Yearly Expenses are $70k
    • Essential yearly expenses are $40k
    • Discretionary yearly expenses are $30k
  • Total Yearly In-Flows are $30k
    • Social Security that she took at age 62 is $20k per year (indexed for inflation)
    • She has a pension from a previous employer of $10k per year
  • Assets
    • $750k in a 401k
    • $25k in a checking account
    • $250k equity in her home (She has a small mortgage left)
    • $200k that she called you about

Since you are no longer a transactional advisor and are a trusted partner and counselor, Joan has opened up and told you everything about her financial situation.  She did this because she understands the concept that you have showed her and believes that it can assist her in achieving financial independence in retirement.  Congratulations, you are almost there.

The next step is to analyze her information.  The first task is to discover her net essential expense.  You do this by subtracting her in-flows from her essential expenses:

$40k – $30k = $10k (Net Essential Expenses).

Therefore, there is a gap of $10k that needs to be addressed.  Once that gap is filled, Joan will not have to worry about bills for the rest of her life.  That is the key.  We need to use a product that will give her an income that will last for her entire life, regardless of how long she will live.  Since Joan is looking to retire as soon as possible, we need to have that income start immediately.

Since you acted as a counselor, you have more valuable information to act upon as an advisor than simply understanding that your client, Joan has $200k to spend. You have a holistic picture of her financial health, her priorities, and her immediate and long-term needs.

Product Recommendations as a Counselor

As an advisor, you may recommend a SPIA (Single Premium Immediate Annuity), which is a self-created pension.  If Joan were not planning on retiring and did not need the funds for a few years, we would look at utilizing either a DIA (Deferred Income Annuity) or a Fixed Indexed Annuity with an Income Rider (FIA).  5 years ago, the DIA yielded the most income.  Today, the FIA gives the client more income.

Since we are using a SPIA with Joan, we need to find out how much needs to be deposited in the SPIA to yield the $10k annually.  You would use the CANNEX software as CANNEX is the foremost providers of Income Annuity quotes.  Luckily, DMI has access to the CANNEX software.  The SPIA rates can change daily, but for a 65-year old female to generate $10k per year with a Cash Refund option, the cost would be around $200k. Sometimes numbers just work out. Therefore, we can use her initial $200k and provide income to cover all her bills for the duration of her retirement.

Reviewing Discretionary Expenses

Now, we need to look at the discretionary expenses of $30k per year.  I would suggest using a vehicle that will also address inflation risk and that is a product that is either directly or indirectly in the market. You would need to find out from Joan if she is comfortable losing any principal with any of the funds used to generate income to address the discretionary expenses.

  • If she is comfortable with that risk, then you can bring mutual funds or a variable annuity into play.
  • If she is not comfortable losing principal, we would be looking at a FIA.

You would, again, reverse engineer to discover how much is needed.  Let us say that it would be $450k.  We can utilize the 401k for that purpose.  We now have taken care of all of Joan’s retirement concerns and still have $300k in 401k assets left over for large emergencies or whatever comes up. If Joan did not have enough in the 401k, we could have also used a HECM (Reverse Mortgage) with her equity to make up the difference.


In summary, a client called you looking for assistance for investing $200k.  You became a counselor and in turn made the client extremely happy knowing that she can retire with a peace of mind.  There are many other retirement strategies to use. However, this one was easy for the client to understand and therefore successful.  I did not even mention that Joan will most likely refer you to some of her friends because you did such a great job of being a counselor.  What you will find as an advisor is if you do right by the client, each and every time, you will have larger cases, get more referrals, and sleep better at night. Isn’t that why you got into the business in the first place?  To be a counselor to your clients.  Let’s get started.