Come gather ’round people wherever you roam and admit that … the old order is rapidly fadin’.
What financial planning is becoming in 2020’s is very different to what it has been. It is becoming more like … well … “planning”.
What it was – the 2010’s.
Maybe financial planning used to be very returns focused. Financial planners would talk to eager eyed punters about moving investment returns beyond market performance. The financial planner, out of necessity following a series of scams and scandals, was a financial intermediary registered and regulated by the Financial Conduct Authority, in order to protect the public from the products pushed. The financial planner was once a product pusher.
Perhaps financial planners were essentially salespeople.
Potentially their worth was all tied up in the product.
The principle value-add they placed in front of their bewildered clients was based on returns they had absolutely no control over. At any instant, they would be obsessed over whether the return line was up or down. They placed their entire worth in the products they sold and how well they did or did not do.
Possibly the goal the financial planner set for their client was making more money.
The client would ask the financial planner to “help me maximise my returns”.
The financial planner would try to beat the market. They would focus on returns. Of course, they had no control over them. So, they would take an inappropriate level of risk or handpick stocks in a fruitless effort to beat the market. They failed miserably. As half of the market always failed and those that won this year did so by luck and soon became next years failures (or cunningly hide their disappointing returns).
Their pitch was all about performance. There publications, financial pornography.
The financial planner would bore their clients talking about their products and the performance. They talked money. They talked just about returns.
When it came to the review, the conversation would be about what had happened. It would be about the performance relative to this or that. The client would talk about an aspect of their portfolio. For example, they might ask the financial planner to review their pension. The financial planner and the client, all they would care about is the stock market. The product. The investment.
The old financial planner would charge a fee contingent on a percentage of product sold plus an indecent ongoing percentage of assets under management, rarely justified by service delivered. The fee structure was vague, and the client didn’t know the full cost.
What it will be – the 2020’s.
Picture this. The new financial planner will care about their worth to the client. They will describe planning as holistic. They will care about how best to coach the client and support them with their financial plan, that’s as robust as possible.
Here, they define life goals and help the clients to make the most of their money.
Imagine this. Their worth is in the plan.
What if the new financial planner is a behavioural coach? They act as a coach and mentor to keep their clients on track with their plan. They aim to understand their client and their needs. They aim to treat their client as the customer, and not the money.
It’s all about client education.
It’s about the use of up-to-date technology.
The financial planner focuses on goals and what’s required to meet them. The focus is to make clients happier.
Using coaching skills. Building long-term relationships. Reviewing aspirations. Looking at where the client wants to get to and delivering that. Some may call it lifestyle financial planning; others call it simply “life planning”.
The new financial planner will present a financial plan, “This is your plan of where you want to get to, so how do we get there?”
The client appreciates having an actual person they can phone. In the event of divorce. Or bereavement.
Financial planners are dealing with people and their emotions.
The aim of the new financial planner is to help their clients find futures that they didn’t even know existed.
The client will ask, “Can you help me to stay in control of my emotions?”
The financial planner’s job is to understand their clients and their unique needs.
The new financial planner will charge a fixed fee based on time taken to complete the task. The fee structure is clear, so the client knows what they are paying for. There will be no conflict of interest.
Instead of looking at returns, stock-picking and timing markets, the financial planner looks at ideal life, aspirations, dreams, what if scenarios, preservation of wealth, segmenting pots by life need, managing risk-weighted returns over a life cycle through asset allocation, maintaining cash reserves, smoothing income payments and the right ownership of assets. The financial planner talks through various tax allowances and makes bespoke plans, which include lifetime cashflow forecasts.
The financial planner’s job is to help their clients understand the markets and what they mean to them. Implementing tax angles that add value along the way.
Clients are unique and no longer fit in model portfolios. Business owners and entrepreneurs have volatile incomes from their businesses. Drawdown is no longer something that just happens in retirement. Accumulation is no longer something that just happens during working life. Succession is no longer something that just happens on death.
Older clients are living longer, which bring new health and inheritance issues. Legacy is no longer just about money!
The new financial planner asks, “What’s your biggest financial fear?”
“What do you want to achieve with your money?”
The new financial planner acts as a coach. Mentor. Keeps the client on track.
The focus is on wellbeing. Rather than wealth.
The focus is to avoid the highway robbers and enjoy wealth in every area of your life.
The new financial planner communicates and explains financial concepts well. They present themselves in a professional manner. They help their clients to reach their financial goals. The plan is delivered, and the adviser helps the client to stay on track and weather the shocks.
The financial planner is a life planner, considering a wider impact that emotion may have on money and that a legacy remains of the client’s life work.
The world is to be a better place for the client having lived.
The new financial planner has a good reputation and has positive reviews. They are knowledgeable on tax and the full consequences of investing. They are approachable and easy to talk to. They are easy to get hold of. They are trusted.
The new financial planner is a fiduciary. They keep their client’s best interest in focus, without conflict of interest with unbiased advice.
The new financial planner communicates and explains financial concepts well. They have all the relevant skills and knowledge.
The new financial planner has an efficient delivery of service at the right price and with a choice of service levels.
The new financial planner says to their client, “There are good decisions you can make. They may not look good, but they are the right ones. I am here to communicate what’s going on and what it means to you.”
The new financial planner is a communicator.
As Bob Dylan once said, “The times they are a changing.”
I’m sure you would agree, if the adviser of 2010s is where we were and the adviser of 2020s is where we want to be, then we need a system, vehicle or solution to get you there.
That’s what the Academy of Life Planning delivers.
We are going through a changing role of a financial planner. What it was, was a financial intermediary. What it has become is a non-intermediating life planner.
We no longer need to intermediate. The key these days is low cost investment, low tax impact and wise asset allocation. With product management outsourced to do-it-yourself passive retail multi-asset funds on platforms, that outperform most intermediated offerings after charges.
Client’s save 1% to 2% per year on fees, which over 25 years adds 33% to 100% on their life savings.
At the Academy we deliver non-intermediating financial planning services to hundreds of clients worldwide. We also train, coach and mentor the UK’s most trusted financial planners. For details, check us out at: