Marketers love a good slogan.
Goals-based financial advice is a good example.
Advisory firms sometimes differentiate themselves on their goals-based advice capability to understand and identify their advice client’s aspirations.
Some institutional advisory groups spent millions making this method as ‘smart’ as possible, to little avail.
Regular readers might suggest I too leaned heavily on this trend. It’s true.
I pursued and initiative two alliances over the past twenty years with international groups with strong credentials in this area. However, that approach has highlighted a more valuable focus, particularly for advisory firms focused on solidifying the on-going value they create for their clients year-in-year-out.
Helping clients identify and articulate goals is no doubt of value. But nowhere near the value of facilitating the on-going and at times, grinding journey towards their goals.
The fundamental need for any advice is helping others to achieve more and overcome complexities that without intervention they are unable to best progress.
The young couples worried about balancing the cash flows of growing families while maintaining some aspects of lifestyles pre-children and careers offering less security, more pressure face many options, all with significant consequences if wrong paths are taken. They feel cornered between a myriad of financial product and service choices, none of which are specifically designed for the impartial advice they’re seeking.
The retired couple worried about the trauma, costs and re-settlement anxiety facing their divorced daughter and three young grandchildren as she struggles out of a dysfunctional relationship. With new financial priorities on their daughter and grandchildren’s well-being, their fears of outliving retirement reserves are heightening as the struggle with the ex-son-in-law gets worse.
The senior A380 pilot who thought retirement was sometime in the next ten years is now a part-time bus driver. His former employer’s promises of longer-term settlement don’t ease the uncertainty. His two creative daughters in COVID-hit film and dance jobs are home again looking for new jobs as government support expires. A widow of six years, he believes he has few choices while feeling growing pent-up emotion and uncertainty of long term consequences for his own and his kid’s future financial life.
An owner of a small transport business specialising in electric buses has won several new contracts with local health care centres and small hospitals. While handling the growth opportunities, two nearby mines have approached him to outsource their own transport needs. As the options are many, the consequences for existing contracts might be damaging, but he wonders if this is an opportunity or a distraction.
An aged care health worker who loves per work but hates her powerlessness in a system driven on profits for investing stakeholders rather than care for vulnerable patients. The stress, traffic and hopelessness of trying to move growing mountains of need with dignity in a facility with few facilities and resources. She wonders if a tree-change to the country is a financial disaster or the break she needs.
An independently minded widow knows her children mean well, but they don’t and won’t agree financially about the family estate. She loves them too much to be objective and manage the differing financial needs, wants and uncertainties they face. While her care and security are of concern for them, hoping they will start getting on financially is not going to happen.
The common and inevitable complexities in our lives drive the need for impartial advice. Our lives spend more time in our real and perceived complexities than basking in the joy of our goals. The advisory firms of the future are building consistent, specific and methodical approaches to solve or manage client’s complexities.
This is the future of financial advice.
However, the industries of financial planning, law, accounting, insurance and banking, unfortunately, have been upon the provision of products or hours rather than the resolution or management of our on-going inevitable complexities.
While specialities and expertise are integral for clients to achieve progress in their financial lives, advisory business models built upon specific specialities will find it harder to sustain renewal income flows compared with business models built upon on-going methodologies that treat the whole of our financial lives and the issues we face rather than just specific parts.
Goals are important. They can act as fuel to support progress as we navigate our inevitable complexities.
What do you reckon?
The above is a part extract from my next book – What Price Value – due for publication mid-2021.
ABOUT JIM STACKPOOL
For over 30 years, Jim has influenced, coached, and consulted advisory firms across Australia. His firm, Certainty Advice Group coaches, trains and is building a growing Advice Group of firms delivering comprehensive, unconflicted advice, priced on value and impact provided. The community of advisory firms aligns with Australia’s highest and only ACCC/IP Australia Certification Mark standard of comprehensive, unconflicted advice – Certainty Advice. He is also an author and keynote speaker.
I agree with the you Jim on your premise. There is a requirement to define goals so that advice can be seen and be accountable to tracking those goals but there is a lot of pre relationship work required before those goals are well defined for the purposes of a client file and an advice document. The complexities that you highlight here, I have connected to what I have have seen recently as Possibilities Planning.
The great value for an adviser is outlining the possibilities (to those situations you covered), educating about trade offs and assisting clients through the clients chosen path.
This comes at a significant investment by the client for the advisers knowledge and understanding.
It would be nice to think that such problems are not always present and that for many valuable clients there are long periods of normality. The question that remains is how to demonstrate that value ( perhaps more so to third parties) does remain in those times of normality?
Thanks Leon – great points. Agree from a product perspective, the goals of clients provide an important benchmark upon which we can help plan. However product is only one of four areas of comprehensive financial advice – the other three being the relationships, the environment and the behaviours which all affect the paths our clients try to follow. For you point about ‘how to demonstrate that value’ – we don’t. It’s less about ‘proving’ progress to our clients and more about client ‘confirming’ they are valuing the advisory relationship – important but vital mindset – comprehensive advisers don’t add value per se, they help their clients lead more valuable lives as a consequences of their work together.