INDIANAPOLIS -- It’s easy for advisors to understand the work they do for their clients given that they engage with it every day – but a little simplification may be in order when it comes to explaining investment strategies to clients.

“It struck me [that during client meetings], if they're overwhelmed now and not following how I’m talking about investments from a behavioral finance perspective, they're not going to buy into this or take my recommendations,” Justin Nichols, managers of operations at Garret Planning Network told attendees during a session at the 2015 NAPFA Fall Conference.

While it may be tempting to show your client their Morningstar portfolio snapshot, 100+ data points can overwhelm clients without the appropriate context. Here are two ways to help boil down the information in a way clients can understand.


You know that the stocks and bonds are the nuts and bolts of any portfolio, but using visual aids and avoiding jargon can help your clients understand how the right mix of investments can work for them.

First, explain that it’s important to invest in as many categories as you reasonably can. Putting together a visual aid like a mosaic that shows the performance of stocks across different categories and time periods can help clients see how diversification works in their favor.

"By doing that, they can see even though one part of the portfolio is down, one part of the portfolio is going up," Nichols said. Show your clients that “how many investment categories we invest in is something we can control.”

Nichols says he never uses phrases like “asset allocation” when describing the process of choosing investments to clients, but puts it in even simpler terms.

"I talked about a mix of stocks and bonds. I didn't use the word asset allocation," he said. Clients, he points out, rarely care about the Sharpe ratio of their portfolios. For more sophisticated clients, or "for the 10 percent of clients that want to know that, provide that as a supplement after the fact and only if they ask about it,” he added.

Using simple language and visual aids to help explain tax impacts and the importance of making small adjustments can help your clients clearly see the work you are doing for them.


Nichols says one of the most important roles of a planner is to help clients stick to the plan. But what’s the best way to articulate that to clients?

"We've created a solid plan; another piece I can help you with is help you stick to the plan. We talked about the market's ups and downs a bit already,” Nichols said he tells clients. “We know there will be good things and bad things, we've created a plan based on things we can control, but how the market rules is really out of our control."

Nichols says it’s important to break down when it’s appropriate to stay in and when to leave the market. Part of helping clients gauge that is explaining that they will see downturns happen, but that can often be perfectly normal.


According to Nichols, all the tools you use in your practice should be streamlined and simplified so your clients can easily understand them. He suggests maintaining a clean and simple website in addition to providing clients with simple, one page snapshots of their financial situations. He also hopes to make conversations simpler by providing clients with a welcoming environment, keeping his office set up so that he can sit on the same side of the table with clients as he discusses their financial lives.

“I think we should think about and rethink about everything we do - how we look out on our website, the layout of the deliverable and how the office is set up,” Nichols said. “It should all be centered on the client and what's better and easier for them. And I think, more often than not, simpler is better."

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