Your Business

Biggest money mistakes: short-term vision

April 2017

Greg Bloom says clients are more engaged if they view their adviser as a friend, writes Alan Hartstein.

The biggest mistake Greg Bloom sees people consistently make is what he describes as short-term vision. “I often have to remind my clients that the decisions they make today will have a huge impact on their standard of living in 10, 20 and 30 years’ time.”

With younger people especially, it’s hard to get them interested in super because it’s so intangible that they don’t really regard it as an asset, Bloom says.

“If, however, you can show them that, by saving 1 per cent on costs or investing in a fund that performs better than others over the long term, it could be worth hundreds of thousands or even millions of dollars more in the long term, that gets them excited.”

Bloom was a finalist in the 2016 AFA Rising Star Award. Most of his clients are between the ages of 25 and 45, tend to work as professionals and are going through the typical life stages of those in that age bracket – getting married and starting a family or saving for a deposit to buy a home.

Aside from superannuation, he also has a focus on insurance, he believes both are vital to any investment strategy, because the best-laid plans could fall apart without them. “You have to have some security for your income and health, especially if you have dependents,” Bloom says.

Getting the simple things right

Bloom says he doesn’t like to dwell on mistakes and prefers to accentuate the positive in any client situation. “If they make a mistake and it’s correctable we correct it, if not, we put in place processes to avoid making the same mistake again.”

Bloom believes the most important things to get right don’t involve complex investment structures or investment vehicles. They are instead simple things such as budgeting, saving, and debt reduction.

“When I sit down and do a comprehensive budget with a client and they see where their money is going, they can hold themselves accountable for what they spend and what they can save,” he says.

If someone has gotten themselves into a large amount of debt, then it’s imperative they get back on the right path immediately, he adds. “I’ll create a system that allows them freedom to spend, but only up to a point. If they have to live on a thousand bucks a month while they’re repaying loans or saving for a deposit on a house then they have to make it work, it’s as simple as that.”

Sometimes the easiest thing to do is set up different accounts for different processes such as saving and spending. Alternatively, Bloom says setting targets and turning savings into a game can be a great way to engage clients.

“It typically takes between three and six months to form a good habit but if you can incentivise clients it can make things easier for them,” he says. “Everyone loves games, and while finances are often a source of tension in a relationship, some healthy competition to see who can save the most over a set period can spur both parties on to achieve more.”

Working together as friends and partners

Bloom engages his clients through regular face-to-face reviews, phone calls and email. “I always make myself available to workshop any ideas they may have,” he adds. Most importantly, he asks them to have a detailed discussion with him before making significant financial decisions.

“Whilst maintaining a professional relationship, I genuinely enjoy being friends with my clients. If I can empathise with them they’ll feel more comfortable and trust my advice a lot more. Being a good adviser involves a lot more than just dishing out advice. It also means giving your clients piece of mind that you’ve got their best interests at heart.”

The right tools for the best advice

Aside from providing a newsletter for clients, with comprehensive information about the world of finance and investment, Bloom also uses calculators to simplify the budgeting and savings process for them. He especially likes Pocketbook, a budgeting tool that can sweep a bank account and tell you where your money goes and on what things.

“It all depends on whether the client wants to understand the finer details of a particular investment. If they do we are always more than happy to provide them with as much information as possible, but more often than not, a simple white board is the most effective tool.”