Every August, I spend an evening at my old school answering questions from Year 11 students as they share their post-school career options.
My sessions are generally Q&A events for kids interested in small businesses.
Last week’s questions ranged from what happens when businesses fail, how to buy business premises using superannuation, how to grow a small business, and what I am doing with AI in my business.
When I enquire what they really want to do, a minority have decided, but most shrug.
I felt the same at their age, and at times, still today.
“What do you really want?” is a powerful question.
GOALS
Financial advisers have created a sub-industry using it.
Goals-based advice.
I used to be an advocate for this approach.
Not long after the 9/11 tragedy, I conducted tours visiting USA and UK advisory firms for principals of Australian advisory firms.
These memorable trips worked well as they forced disparate but success-oriented principals to travel together, visiting diverse but usually innovative advisory firms in different marketplaces.
The reviews, debates, and exchanges extended late into the night before reassembling the following morning for the shuttle to another vanguard firm.
Due to the influence of advice pioneers such as Paul Everingham, Bruce Wright, Ross Levin, Bill Bachrach, John Bowen, Dan Sullivan, Mark Tibergien, Rebecca Pomering, Deena Katz, Harold Evensky, Julie Littlechild, George Kinder, and Bob Veres, goals-based advice practices became the trend-setters for advisory practices.
Studies have vindicated the value of goal conversations.
When done well, client-goal conversations can act like a drug to provide a focus that advances rapport, stimulates new actions, and provides direction.
Russ Alan Prince’s pioneering research on the effectiveness of different goals for different clients has helped skill advisers differentiate their goal conversations for different personalities – focusing on family goals for ‘family stewards’, freedom goals for ‘independents’, and accumulation goals for clients driven to build reserves.
Despite their value and proven research, goal conversations can also be considered gimmicks.
GIMMICK?
Conversations with the client’s doctor, lawyer, or accountant usually don’t involve goals.
These conversations focus on the client’s reason for the visit, such as a persistent cough, a property or estate problem, or a tax issue.
Considering that most professional service providers consider the long-term consequences of their advice, why does a share, insurance, superannuation fund, or any purchase decision with a financial adviser require an in-depth focus on the client’s goals?
While the answer is obvious for advisory teams and mandated by the Financial Planners & Advisers Codes of Ethics, it does not remove the common obstacle advisory teams face when positioning and conducting goal conversations.
Even with established clients, when goal conversations are repeated in annual review meetings, they can feel gimmicky as similar goals from similar conversations appear like the familiar scenes from Groundhog Day.
The conversation may also seem pointless for clients with enough wealth to achieve, acquire, or conduct most of their goals. Why have a goals conversation when both adviser and client know there are sufficient funds to achieve most of the aspirations discussed?
The law of diminishing returns can also reduce the strength of goal-setting conversations and convert repeated conversations into reminders of the lack of progress. The initial motivation, commitment, and focus inspired by goal conversations are worn thin by the constant friction generated by a client’s daily reality.
Powerful goal conversations can raise focus, motivation, rapport, ideas, excitement, and hope. While important, advice is not about goals.
The research on goals provides clues to the best focus of comprehensive advice conversations.
Like the kids in my Year 11 careers talk, “What do you really want?” isn’t the question that best serves them.
The better question for the Year 11 kids (and financial advisers) is, “What do you have to do to get what you want?”
PATHS
Advice is less about goals and more about paths.
The research on goals shows that the more specific and reiterated goals are, the greater the likelihood of a client’s persistence to achieve them, particularly as specific goal-seeking strategies fail.
Note the last sentence – “…particularly as specific goal-seeking strategies fail”.
As the (misquoted) Allen Saunders stated, “Life is what happens to us while we are making other plans.”
No matter how valuable my career conversations might have been last week with the Year 11 kids, they are minuscule compared to the value of the conversations at the heart of any relationship that assist those kids in navigating the inevitable hurdles they will face.
The same is true for advisory teams offering comprehensive advice.
Without the advisory skills to manage, advise, and lead clients along their unique paths, the initial value of goal conversations will fade, increasing pressure on renewal fees.
Thanks to fintech, success in the future business models of comprehensive financial advice will build upon the value of relationships that keep clients on their best path.
The future of advice has never been better for advisory teams with the skills and systems to consistently, methodically, and practically manage valuable paths for their comprehensive advice clients.
Goals are important but they are no more important than asset balances, insurance coverage, cash flow control, or solid tax structures.
Valuable advice is not about goals.
Valuable advice is about managing the twists, bumps, behaviours, and consequences on each client’s path step by step, regardless of how boring, exciting, steep, complicated, simple, frightening, or significant the required step must be.
What do you reckon?
Photo credit: shutterstock_1426613462
ABOUT JIM STACKPOOL
For over 30 years, Jim has influenced, coached, and consulted financial advisory firms across Australia. He founded a training firm, Certainty Advice Group, to coach, skill and build advisory firms delivering comprehensive, unconflicted advice with fees priced purely on client value. He has grown a solid and collaborative community of advisory firms aligned to his firm’s comprehensive advice model – Certainty Advice – Australia’s only Certification Mark accredited by ACCC and IP Australia for impartial financial advice. He presents at conferences, has judged professional advice awards, written industry white papers, chaired practice management curriculums for tertiary institutions, and authored four books on financial advice – his latest – What Price Value – was released in March 2022.