These are interesting times.
Interesting is probably an understatement, thanks to regulatory reform, ridiculous compliance guidelines, depleted advice talent, and increasing demands from teams and clients.
Advisers don’t need more hassles – particularly self-inflicted ones.
However, these busier-than-ever times contain silver linings.
But like many opportunities, as Henry Dodd said, “Most people miss opportunities because they are dressed in overalls and look like hard work.”
There are opportunities to regain control.
For instance, stop advising the inadvisable.
The inadvisable client often has all the hallmarks of an ideal client.
But they lack the heart of advice – responsibility.
When advisers lose focus on the value of their advice and concentrate on retaining fees, they lose time and drain their confidence trying to advise inadvisable clients who skirt their fundamental problem of irresponsibility.
They waste time trying too hard to search for more acceptable approaches, making themselves too available, or introducing third parties to find the advice that doesn’t come at a cost their client is unwilling to pay.
As an old collaborator of mine – John Bowen – was fond of saying, “…sometimes the most valuable word in client management is ‘next’“.
The inadvisable surround themselves deep in their world of reasons why they can’t act or fulfill the advice no matter how strongly they need it.
Like the heart attack survivor who fails to attend crucial post-recovery rehabilitation, the inadvisable prefer easy advice that does not threaten them and their status quo.
They will forever blame everyone else, especially their busy advisers who try but inevitably fail to achieve their impossible expectations.
Another niche of clients who are harder to release, easier to identify, and more common are those whom advisers call friends.
Whether charged or not, advising friends scars a friendship.
Even if it’s only a tiny blight, these advice relationships feel different for a good reason.
They crossed a line.
Having friendship, love, rapport, or affection amidst the foundations of an advisory relationship crosses the intangible line of best interests.
The problems are the perceived and actual (often unintended) consequences.
When the objectives and consequences of advice are influenced, whether perceived or actual, by a friendship, advice has one too many objectives – one being mateship, which conflicts with the foremost one – serving the client’s best interests.
Impartiality is an adviser’s seatbelt, protecting every advice journey against unintended consequences.
There may be exceptions for genuine emergencies, but like a doctor in the family, critical situations need impartial, objective experts as soon as possible.
Beyond friendships, there is another gravity-like force diminishing advisory efforts in the messy area of ineffective advisory relationships – the desire to help, particularly too much.
Besides the ‘advice-humanoids’ currently being built by the fintech giants, advisers are humans.
Most adviser-client relationships will experience demanding conversations about finding the right balance between helping and challenging clients.
Where the humanoid advisers will struggle, and the human advisers will flourish is when clients encounter circumstances requiring ‘tough’ but valuable advice.
When a client’s dreams come unstuck, dysfunctional lifestyles need an overhaul, an uncomfortable issue bubbles up from the bottom of their ‘too-hard’ basket, or the advice required exceeds the fees charged, the best next steps on the client’s advice path can be risky.
Not only for clients but also for their advisers.
For overly congenial advisers, their dopamine reserves tend to disappear just when ‘hard’ client conversations are most needed. This often results in unrelenting day-to-day activity levels, trying to do too much for too many.
Advising clients for life differs from advising clients for their best possible life.
There will be times when the advisory relationship is at risk as the advice needed requires skills beyond a congenial approach if the client is to remain on their best possible forwards path when they face significant headwinds requiring more fees or difficult decisions.
The irony of congenial advisers being unable or unwilling to deliver the advice needed for tough times is the transformation of roles.
Their clients, particularly their best ones, treat their congenial advisers as order-takers rather than path-makers, converting the advisory role into a servant and resetting the client’s path to align with the client’s wants rather than their needs.
THE FINTECH FUTURE
Pre the era of fintech advice, advising the inadvisable, working with friends, and being overly friendly was not frowned upon.
It was often openly encouraged.
The old growth model was much simpler and worked like compound interest.
Over the last few decades, growing advisory firms has been about making as many client relationships as possible, like planting chestnuts and waiting patiently for the blooming oak trees.
Fintech’s advice-humanoids change that forever.
But they also provide serious opportunities.
Fintech’s inevitable growth in the distribution of client products will reveal a gap they cannot consistently and methodically deliver – managing and caring for the client’s most valuable financial path.
Learning the skills, frameworks, models, and pricing to deliver the client value requires being vulnerable, tough, impartial, and strong to keep clients on their best possible paths through their good and bad times.
That’s advice – it isn’t a product, never has been, and never will be.
What do you reckon?
Photo credit: shutterstock_2094650728
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.