When to Rely on Financial Calculators in Your Practice

No matter what financial calculators you turn to, there is one important distinction you must make: what role will the calculators play in your business? While calculators are meant to help you prove your solutions mathematically and work through problems to find solutions, many calculators in the industry have a nice visual element. Should you use calculators in front of clients? And if so, how often? These are questions we hear often, and we think we have some answers.

Woman using financial calculators

The Purpose of Financial Calculators

Todd Langford, the co-founder of the Prosperity Economics Movement, is also the developer of the Truth Concepts calculator suite. As such, we feel qualified to talk more specifically about Truth Concepts, though we believe that this can have a wider application, too.

The purpose of Truth Concepts is to show the real, mathematical proof of certain financial concepts. When Todd was creating it, he wanted to keep whole life insurance in mind, as well as other common purchases and strategies. You can calculate and compare the results of just about any financial decision with one of the Truth Concepts calculators. First and foremost, they’re workhorses.

To put it plainly, Truth Concepts was designed with the solution-oriented advisor in mind, so that you can get in and do the math. There are other calculators out there that do the opposite. They generate a pretty visual, without a lot of behind-the-scenes work or proof. The advisor just has to trust, as does the client. While this works for many, Todd recognized that there would be advisors out there who weren’t content until they did the work themselves (Todd included). The calculators, therefore, help you (the advisor) KNOW that you’re doing the best you can for your client.

However, this also means that in order to do the work, you must put yourself in the shoes of the “perpetual learner.” You must have a deep understanding of your business, the calculators, and how to find solutions. You may think it’s obvious, yet it seems in the insurance industry it’s actually not a requirement to have a deep understanding. And that’s where the industry gets a bad rap.

How to Use Financial Calculators

There’s a misunderstanding that calculators are for the client. That’s why there are plenty of calculators out there that ask nothing of the advisor, and simply create a nice, neat image for the client. Yet we should not use calculators solely as persuasive pieces. In fact, we’d argue that in most circumstances, you may not even want to use a calculator in front of a client.

With regular, skillful use of financial calculators, you should be able to build up your own confidence. The calculators are meant to help YOU know what you’re talking about so that you can make strong recommendations. And if you have some problem-solving to do, the calculators are there to back you up on your own time. When you use calculators in front of the client, you’re relying on their ability to interpret the numbers. This is a huge mistake—if people wanted to interpret their own numbers, they wouldn’t seek an advisor. And showing them a screen may lead them to the wrong conclusions because they now have to translate the numbers themselves.

The goal of using the calculators should be not having to use them in front of a client at all. You can use them behind the scenes all you want, yet the client craves your knowledge and authority in the field, which includes bringing them solutions with confidence. The more you can trust yourself and your own expertise, the more the client can do so.

Should You Stop Using Calculators With Clients Altogether?

Not necessarily. As we suggested above, there may still be times where you can benefit from bringing a calculator into your discussions. For example, some clients are going to be extremely numbers-oriented. They may trust you completely, and still feel the need to look at the numbers for themselves. This is a great time to bring in some calculators. We’re not trying to obscure numbers or facts, we’re simply trying to remove obstacles for the client. And for some people, trying to interpret the numbers can lead to obstacles.

The real secret is knowing what to show your clients, and when. For example, if you’re trying to pull up a calculator in the first meeting to show the return on a life insurance policy, you might lose the client. They’re going to see the IRR in the first few years and run for the hills, regardless of how the policy performs in 30 years. Most people have been “trained” by the financial media to see things quite differently. Instead, we think you’ll make more headway by taking the “Parallel Paths” approach. This is an opening talk from Vince D’Addona, which gets results in 15 minutes. It works because it appeals to emotions and logic, and is indisputable—the numbers don’t matter at all, it’s true for everyone in every case.

Parallel Paths helps you get data and gets the client’s foot in the door. After that, they may have more questions, at which point you can decide when it’s appropriate to show charts and graphs to help them learn. Just remember that with a good relationship, you’ll have thirty years or more to help them grow and learn. Ultimately, remember that calculators exist to help you solve problems. They don’t work without your brain. Your expertise and relationship with the client are the stars of the show, and the calculators are the supplement to that. You don’t need the calculators to do the heavy lifting, nor does your client desire it.

Join PEA Today

To learn more about Parallel Paths, we invite you to join our Universal Membership. You’ll gain access to all the training so that you can use this opening in your own client meetings. In addition, you’ll get the support of a community behind you, which you can leverage for joint-work, problem-solving, and growth.

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