The profession continues to improve and innovate. But unless advisers clearly communicate their value, clients will not understand the benefits of financial planning.
I recall the day, a few years ago, when a shiny new magazine landed on our office doormat. Its high production values, sharp writing and focus on a ‘new model’ differentiated it from its peers.
Fast forward to 2018. The profession I first joined in 1995 (for the most part, it was not a profession then, but that is a blog for another day) has changed beyond recognition. In the past few years the pace of that change has increased immeasurably.
‘New model’ advisers continue to innovate, embracing financial planning and discovering different ways to add value to their clients. All the while, they refine, and in some cases revolutionise, their business and charging models.
Even so, they are failing to effectively communicate these significant points of difference to consumers.
Take the plethora of new job titles we have seen in recent years. Some are helpful, accurately describing the individual’s role. Others are less so, and (if I were inclined to be uncharitable) perhaps designed to cover up a restricted adviser’s true status.
Then there are those trying to be too clever. I am sure it will only be a matter of time before we see ‘wealth artisan’ or ‘financial architect’ on someone’s business card.
Seriously though, how are consumers supposed to understand the difference between a financial adviser, a financial planner and a lifestyle financial planner? And it is almost impossible when the different definitions of restricted (possibly the most unhelpful and misunderstood term I have seen in the past 23 years) are added to the linguistic mix.
Add a general lack of trust in financial services and we have problems, despite planners I speak with citing numerous examples of where their work has changed clients’ lives.
Being an innovator is not enough. Those moving from the ‘new model’ must also be masters of communication. They need to explain how they are different and, more importantly, how those differences benefit their clients.
Know your niche
Let us consider three examples. First, working in a niche. Some planners know their niche intimately and are not afraid to specialise. Others are more resistant to change, worried specialising in a certain type of client or advice will limit their growth or mean they miss opportunities.
It will not. In fact, the opposite is true. There are times when we all need specialist advice. If, for example, you find a nasty looking mole or a suspicious lump, your GP is the gateway to a specialist.
Similarly, if you need advice on the general data protection regulation, you see someone who knows the new rules intimately rather than a generalist compliance consultant.
Specialising will give your clients confidence you have the knowledge and experience to solve their problems, because you work with people just like them.
Second, fixed fees. Among the planner community there seems to be a shift towards fixed fees. The pace of change is perhaps understandably quicker when it comes to initial rather than ongoing fees. But there is a growing wind of change.
Despite it being a key differentiator and potentially reducing the cost of advice, I rarely see planners effectively explaining what they do and the benefits they bring to clients.
Heart to heart
The final example is focusing on goals, objectives and aspirations. Initially, people will probably seek your assistance because they have a financial problem or challenge.
In all likelihood, this will soon turn into a wider conversation. The focus on a client’s life, naturally with the support of financial forecasting software, is a fundamental differentiator for planners.
Sure, it will undoubtedly become more detailed ‘advice’ during the implementation process. But clearly communicating what financial planning is, and its benefits, is of paramount importance.
True innovation and effective communication are two sides of the same coin. By doing both effectively, more people than ever will understand, and ultimately benefit, from financial planning. The businesses that get this right will thrive.
Phil Bray is director at The Yardstick Agency.