Proper financial planning is really about connecting with clients, understanding where they are in their life, how they got where they are (i.e. what's their story?). It's about being genuinely interested in another human being – and where they are trying to get to; about the life they have and the life they want.
Ideally, it's the process of uncovering what they want to be, do, or achieve – for themselves and their family – before it's too late. It's about helping folk do stuff before they're too old to enjoy themselves… or before they're in a box!
Life is not a rehearsal. I think it's an important part of our job to remind clients of that.
In other words, what sort of life are they living now and what sort of life do they want to live in the future?
Then the big question is: What is the cost of their current and desired lifestyle? And what do they need to do to achieve it and, more importantly, maintain it?
That is where proper financial planning comes in: Identifying the resources available to them now, the resources that might become available to them in the future and, more importantly, the resources that might need to become available in order for them to achieve their life plan without ever running out of money, or dying with too much.
A lot of advisors have forgotten this. They've lost their why. They've lost their purpose. And sadly, it shows. They actually think their job is to ‘manage money' or fiddle with products and investments – the money stuff.
Yet products and investments are simply tools in the bag to be used, if required, to get the job done. I find it absolutely amazing how many advisors have built a client service proposition that revolves around the tools in their bag. And, get this, some have even allowed their 'investment philosophy' to become their service proposition! That's weird. And very stupid.
It's not surprising advisors have lost the plot, what with regulatory pressures, the focus on higher technical qualifications, not to mention the ongoing pressure from the ‘industry' to keep peddling its products... the distractions go on and on.
So, if advisors have become boring, or overly technical, or no longer able to communicate their service in a compelling way, then it's not necessarily their fault. The industry has been messing with their heads.
But what do clients want? (continued.)