Articles
This is when I'll pay for financial advice
Only one independent financial adviser tried to sell me something last week, in seven days where I shook hands with around one hundred and fifty IFAs and financial planners at a variety of events, presentations and seminars.
He skilfully took me to one side and explained that I looked like an astute person who would see the significant benefits in investing in a particular fund. Multi-coloured graphs were produced in support of his argument, along with a gift of the gab that I had not heard in a long while. The only thing ‘new model’ about him was his shirt. Oddly, he didn’t have a business card with him.
In a way, I was surprisingly impressed at this overt display of optimistic and proactive salesmanship; something I had been lead to believe had died out with the dinosaurs, LAPR and MIRAS – and also in a week when the RDR consultancy paper was issued.
What a contrast this was with earlier in the week when I spent two days with George Kinder and prospective Life Planners on his acclaimed Seven Stages of Money Maturity workshop. For some within the profession, George Kinder’s approach to engaging with clients is at exactly the opposite end of the spectrum from my friend with the graphs.
The venue for Kinder’s workshop was St Ethelburga’s church in the City of London. The last time I had been there was the day before an IRA bomb devasted the building in April 1993. Now restored and described as ‘a place to inspire and equip people to pursue reconciliation and peacemaking in their own communities and lives’ – it could not have been a more perfect venue, and one that New Model Shirt would undoubtedly have struggled with.
But there are also professional IFAs and financial planners who equally struggle with understanding what Kinder is bringing to the table, and why St Ethelburga’s is the ideal venue for his training.
“Isn’t it life coaching?” is a question I’ve been asked. And from those who perhaps know a little about Kinder’s methodology often comes “We already do most of that stuff”.
Well, no it isn’t and no you don’t. Nowhere near.
It’s understandable then, that an industry which prides itself on the demonstration of professionalism by examination and qualifications would find no place for life coaching as part of its proposition. Heaven forbid. Yet, this is the same industry which has, for the most part given away its services for ‘free’ for as long as we can remember. Not even life coaches do that, so it’s no surprise that change is hard to embrace for many.
But change is exactly what’s needed – and at many different levels. Not just how we’re remunerated, but in how we are perceived, how we brand and promote ourselves, how we run our businesses, how we engage with the media (yes really), how we use technology and in so many other ways.
Whilst exams, qualifications and remuneration seem to be at the heart of the professionalism debate, I’d venture to suggest that they are not the key issues for the profession to focus on. Qualifications are merely your ticket to the game, and if the RDR paper is anything to go by, the remuneration issue is finally put to bed. Which means that we can now focus on what professionalism is really all about – how we engage with clients. New Model Shirt is at one end of the scale; George Kinder is at the other.
In my thirty one years working with IFAs and financial planners (and now Life Planners), with the exception of procedural process dictated by regulation, I have to admit to having seen little change in the way we engage with clients. ‘Knowing your client’ sounds like commonsense to most reasonable people, but I wonder just how seriously this is embraced beyond filling in boxes on a fact find.
Well, if you know anything about George Kinder’s methodology, you’ll have grasped that that knowing your client takes on a completely different and fundamentally deeper meaning. In fact, it was suggested to me last week that when a client doesn’t proceed with recommendations you have made to them, it is only because YOU the financial adviser have failed to truly understand the client’s motivations and goals. You asked all the questions on the fact find, you ticked all the boxes, you did your research, you made your recommendations, the client made the right noises – but they still didn’t follow your advice.
What happened? Client inertia? Price? A friend in the pub suggested a different solution? Or was it because you never really got deep under the skin of the client to uncover what really drives them as a human being?
Anyone who deals with money is under immense scrutiny right now – whether ‘greedy bankers’, MPs, financial advisers or whoever. All are quite rightly searching for ways to enhance the perception of their trustworthiness and credibility, and at the end of the day that will be determined by how each interacts with their customers.
Now if you want to call George Kinder’s methodology ‘life coaching’ that’s fine with me, but if a graduate of the Kinder Institute helps me to uncover my deepest and most profound goals – and can actually help me achieve them, frankly I don’t care what it’s called. But to be clear, life coaches as we know them do not normally (and are not qualified to) help with your financial affairs, and it will be a financial planner’s skill with money which will help to translate life goals into reality. It’s called Life Planning – not Life Coaching.
But that’s not to say that today’s financial adviser shouldn’t be offering services that make themselves more attractive to and more relevant to today’s consumer. Despite the current economic environment, we are a more wealthy society today and we naturally aspire to more affluent lifestyles – and that often includes the trappings of money such as life and fitness coaches, cleaners, gardeners and so on.
So whilst I’ve gone out of my way to say that financial advisers are not l
Author: Philip Calvert
Posted: Monday, June 29, 2009 | 11:52:21 AM
Comments
Sadly, being absent from the profession at the very time when it seems some have adopted the right methodology of change, I missed it first time round and am now playing catch-up.
I will hopefully one day manage to invest in and learn myself the EVOKE methodology - I always had a passion for good financial advice while I was in the trade and now I'm on the 'service industry' side of the fence I can only applaud what I see as a better solution.
Look forward to seeing far more people take up the torch on this side of the pond.
The dinosaurs are still very much alive.
You are lucky you don't have to mix with them!
Sean
It truly is an empowering, liberating and purposeful process that promotes amongst many other things 'freedom'. A Common Sense approach to dealing with both clients and indeed ourselves (often forgotten).
Upon reflection it is amazing when you reflect that this is Common Sense, but I cannot quite understand why it is not so 'Common'
I whole heartidly encourage & urge many Financial Advisers and Financial Planners to join this community
For over 25 years in several countries, I have enjoyed our industry. I was closely involved with US financial planning from the IAFP and ICFP days in the 80s. Yet I still see plenty of 'worst practice' in an industry still trying to redefine itself as a profession. In the UK the debate has descended to professional one-upmanship about qualifications empowerment (by the people who sell courses obviously), not about client empowerment.
Years ago one of my savvy NY clients told me that the true Financial Planner is the client, not the advisor; a most profound statement! I even wrote about it in the IFP magazine. Another client explained to me what business I was in. He said, after my clumsy 'stuck in the elevator' pitch. "Now I get it! You help me do what I would do for myself - IF I had the time, the knowhow, the resources and the inclination to do it!". "Yes", I said proudly (and secretly relieved) as if I had the smarts to figure out the molecular structure of our business as he innocently did!
Since then it became clear. Industry fact finds were a hindrance, not a help. Why? They set the advisor on the wrong path from the outset loading the dice for an eventual product sale as data is greedily gathered to nail the sale. Instead my opening approach is usually. "What's your most pressing problem?" We go from there to wherever it takes us. The client is the Planner. I am the builder.
I want to learn more about the Kinder method. Thanks for the summary, Jeremy. It’s what we do already? I am currently on a coaching assignment for the largest insurance group in the Caribbean region. Ironically, I am coaching the advisors on how to coach clients into goal 'disclosure and admission' before they get into a mechanical fact-find. Transparency is a two way window. If both client and advisor do not mutually disclose their respective goals (and this goes beyond remuneration disclosure) how can there be an honest and productive relationship (for a day far less for an advertised lifetime relationship!)? Mutual accountability must exist between client Planner and professional Facilitator.
Furthermore, ca. 95% of the financial advice and broking industry is hinged on 'good weather' as opposed to ‘all weather’ advice. Ie. “If you have a money problem come back later, if you have cash to invest, please come in”.
We were a pioneer of debt management for IFAs to help their clients in the 1990s forming a special advice division. Ironically our biggest occupational client group turned out to be financial advisors (IFAs, Tied Agents, Financial Planners, Lawyers).
We recently formed the Caribbean Financial Planning Association. Our mission statement is about professional development for client empowerment, not a narcisstic new veneer for professional wannabes. It simply says:
“To assist the career development of financial professionals in empowering Caribbean families and business owners towards financial self-sufficiency.”
Let’s hope IFA Life can bring life to this common sense molecular concept.
Great to hear your comments. You obviously thoroughly enjoyed the 2-day.
Can I take the opportunity to endorse much of what you say. It is five years almost to the day that I attended the first Seven Stages workshop in the UK, arranged with great foresight by the late David Norton. I then enrolled on the five day “Lighting the Torch” workshop to learn how to deliver the Kinder Institute’s EVOKE life planning process (EVOKE standing for Exploration, Vision, Obstacles, Knowledge and Execution). This was followed by a six month mentorship which led to me becoming a KI Registered Life Planner in March 2006.
Since then I have developed a life planning business using EVOKE and I think it provides advisers with three key tools for delivering an exceptional service to clients.
First, empathic listening helps planners to know their clients in a way beyond anything dreamt of by the FSA, and in turn clients build an immense store of trust in their planners. To borrow from Stephen Covey, listening empathically to a client for an hour is a huge deposit to their emotional bank account that strengthens deeply the client / planner relationship.
Second, the Seven Stages provides a powerful paradigm for helping clients bring life and money together so they understand that the object of any financial strategy is to achieve their profound life (not financial) goals. EVOKE is primarily about applying the Seven Stages so that a client can deal with money in a mature way to achieve their life plan. The Seven Stages provides planners with a method of assessing the client’s attitude to money and delivering ways of overcoming emotional obstacles to dealing with money.
Finally, EVOKE itself is a powerful process for delivering the right financial strategies and products to a client. At its centre is the Obstacles phase, during which obstacles of every sort are identified and dealt with, something that is often not covered in conventional financial planning processes. And life planners can successfully challenge their clients about the obstacles to achieving their plan only because of the deep relationship formed through empathic listening in the early stages of the process. EVOKE does not impose plans and solutions on clients. It gives planners the skills and methods that enable clients to work out their own goals and plans for achieving them.
Any planner considering the Kinder Institute life planning route needs to be aware that they are committing to learning new skills (empathic listening in particular), a new template for dealing with money (the Seven Stages of Money Maturity) and a new process for delivering financial planning (EVOKE). It is a significant commitment, but it is worth it.