Sadly, it's not. Instead products: investments, pensions, ISAs, - the boring ‘money stuff’ - becomes the focus. And they fail to answer the BIG questions.
So they lose. Big time.
Charges, total expense ratios, asset allocation, performance, comparisons, suitability reports, valuations, reviews - that's where most Advisers spend their time. And then they'll offer to review this 'stuff' every year - as if it is some form of valuable ongoing 'service'? But really, what is the real value in that?
I’m not suggesting that the ‘product related stuff’ isn’t important. It is.
But it’s not that important.
Not compared to answering the big questions and identifying and helping clients get what they want out of life, before it's too late.
But here is where well meaning, well qualified Advisers are failing. All thanks to the 'Industry'.
Want some examples of how Advisers fail to tell the Truth About Money?
Example 1: I’ve seen Advisers spend hours and hours - days even - putting together a suitability report for an investment, based primarily on a clients’ attitude to risk. And they’d claim they were doing a good job!
But all the time they’d fail to identify what that client’s financial future really looked like; where they were heading financially; whether they could afford to maintain their lifestyle, or whether they were going to run out of money - or die with too much! They hadn't asked, or answered, the BIG questions. They hadn't told the 'Truth About Money'.
Example 2: I’ve seen Advisers fret over which £100 per month pension to recommend to a business owner client, based on their supposed ‘affordability’, all the time failing to tell that client that in order to keep living anything like the life they’ve got they need to be putting £5,000 per month away! They failed to tell the 'Truth About Money'.
Example 3: I’ve been in competition with two other Advisers, both recommending that a client invest their hard earned wealth resulting from the sale of their business into an above average risk portfolio - because that’s what the client’s risk profile identified.
But that's not the 'Truth About Money'.
Instead, I pointed out to that client that they didn’t actually need to take any risk. They needed prudence, not performance. They needed just 0.2% real rate of return to ensure they could live a great life and never run out of money. I pointed out to the client that a ‘risk profile’ is the MAXIMUM amount of risk you’re prepared to take, not the risk you SHOULD take. (Guess who got the multi million pound investment and referrals galore?)
Sadly, because of too much product focus, there are just too many Advisers recommending investments by effectively ‘sticking pins in clients’ in order to identify their ‘pain threshold’ (how much risk they are prepared to take) - and then going back to them and recommending a portfolio that should always give those clients that amount of pain!
That's why millions of people all over the Country might just have their money invested in all the wrong places - all thanks to risk profiling.
Example 4: Recently, I've noticed a growing trend. Advisers adopting a 'passive' 'evidenced-based' investment approach so they can shave some costs out of their clients investments - normally so they can bolt in their fee!
But for what exactly?
Shifting clients to a low cost investment solution is a good story - in year one!
But then what are they going to do? The Adviser then becomes the most expensive (and most explicit) cost in the 'investment' chain. What are they going to do to justify their fees going forward? A little rebalancing ain't worth 1%pa!!! They'd better start telling the REAL Truth About Money!
Here's another example. This time, it cost the client dearly...
I’ve seen a super qualified Adviser happily take this year’s ISA investment off a new client, only to fail to identify that that client is still working in a job they hate, when they could in fact retire immediately and live happily ever after without ever running out of money. Sadly, 3 years later, that client - still stressed and working in a job they hate - finds out they’ve got just 6 months to live.
Result: three years of their life lost, spent working in a job they hate when they could have been playing! That client could have easily afforded to retire 5 years earlier. He could have been spending precious time with his wife and family, enjoying what turned out to be only a short amount of time they had left together. But it’s too late. Instead, he wasted his precious time working. Their Adviser was well qualified, well meaning and no doubt a nice guy - but he hadn’t done the job properly. He’d focused on the wrong things. He'd sorted out their ISA but he hadn't told the 'Truth About Money'.
And here’s the funny thing. He’d only earned a fraction of what he could have earned if only he’d known a better way of doing things.
Question: Using the above client as an example, what value would you place on:
1) Arranging an ISA? (Traditional financial advice)
2) Freeing a client from a job they hate and enabling them to have the peace of mind and security that they can enjoy the rest of their lives without fear of ever running out of money, WHATEVER happens? (Lifestyle Financial Planning)
But Advisers say: "But they only wanted an ISA!" "They didn't want 'financial planning!'"
Balderdash, I say! Or words to that effect.
Are they a professional or what?
Are they going to do the job properly, or not?
Are they an 'order taker' or a PROFESSIONAL Financial Planner?
The best fund, the best asset allocation, the cheapest product, won’t change a client’s life. The Truth About Money will.
Showing clients where they are heading financially, answering their BIG questions - like ‘How Much Is Enough?’ - engaging with them about the important things, this is the stuff that clients want – and they’ll pay you good money for it!
In fact, isn't it our responsibility to do this? Otherwise we are just leading clients astray.
Be prepared to turn clients down. Don't play a part in their illusion!
When you choose to tell clients the 'Truth About Money' by delivering Lifestyle Financial Planning there will always be a little bit more work. But that is what is needed to show clients what their financial future really looks like. That's when clients take action, that’s when they engage with you and your service. Clients absolutely love it and because of this will agree to you being well paid - every year.
WATCH THIS FREE VIDEO THAT EXPLAINS THE TRUTH ABOUT MONEY
The simple fact is this: clients won't value Financial Planning until they EXPERIENCE it. It's our job to help them experience it. Then they'll get it. Then they'll truly see the value that you can add - not in getting the cheapest products, or best performing funds - but in helping them to live a great life with the financial clarity and peace of mind they deserve. Now that's a service proposition that’s worth paying for!
Better still, when you dedicate your service to 'Telling Clients The Truth About Money' it will provide you with the integrity, enthusiasm, confidence and belief to easily communicate your service, so you get more of the RIGHT clients and much bigger fees.