Experts: Carolyn Weir, Fidelity Adviser Services and Alina Burlacu, AB Personal Performance Coaching Facilitator: Richard Parkin, Founder, Richard Parkin Consulting
Headlines:
- Financial wellness is the direct consequence of effective financial planning
- Clients often are not aware of the benefits of financial planning or what a financial planner does, nor the role they must actively play alongside the advice professionals to drive positive outcomes
- Focusing clients’ attention on life choices and values, beyond their goals and the financial plan, will drive better engagement and client loyalty
- Firms need to recondition their practice models to allow for a better understanding of client motivations and position the plans to enable the client to pivot and achieve their desired outcomes, at any life stages they may be going through
Context:
What do we mean by financial wellness?
Financial wellness can be difficult to define but our participants were unanimous in their view that financial wellness is a direct result of effective financial planning that takes into account both the practical, and also the emotional side of money management.
Helping clients identify what’s important to them, understanding what’s involved in achieving those outcomes and building a financial plan to deliver them are seen as the core to delivering value to clients.
Most of the firms in the room were in the process of trying to move their businesses to be more wellness and financial planning centred. There was a common belief that this would deliver more durable and valuable client relationships than more traditional, transactional financial advice models.
What do clients want?
Clients often are not aware of or value the benefits of financial planning or what a financial planner does, nor the role they must actively play alongside the advice professionals to drive positive outcomes
One of the key challenges in moving away from a transactional advice model is that clients don’t understand what financial planning is, what financial planners do and what benefits and value they deliver. The role of the financial planner was contrasted with that of other professionals such as doctors and accountants whose role is generally well understood.
Clients are often motivated to seek advice in relation to a specific concern (e.g., managing an inheritance, approaching retirement etc) and this can drive a transactional relationship from the start.
The key to success is to move away from dealing with the immediate concern and broaden the client’s perspective and understanding of what they need and the benefits of dealing with their overall financial wellbeing.
What’s the benefit?
Focusing clients’ attention on life choices and values, beyond their goals and the financial plan, will drive better engagement and client loyalty
Focusing on progress against their desired outcomes and improving overall financial wellbeing rather than simply on product performance should drive greater client engagement.
More importantly, divorcing the value of financial planning advice from market performance should increase the durability of relationships and help build more resilient businesses.
Setting expectations upfront is important
Firms need to recondition their practice models to allow for a better understanding of client motivations and position the plans to enable the client to pivot and achieve their desired outcomes, at any life stages they may be going through
The perception is that there is only so much free time firms can afford to invest in client relationships upfront. The tendency has been to use the first meeting to fact-find and get to an advice “answer” quickly.
Participants were keen to make the first meeting more focused on clients wants and needs, to understand what motivates them and how they make decisions before getting into detail. Being able to engage on an emotional level with clients is important, as is the ability to position financial planning as an ongoing relationship focused on developing financial wellbeing.
This is challenging for some advisers, particularly those who are technically strong and keen to demonstrate their expertise. Some feel it may also be harder for younger advisers who have less “life experience” they can bring to bear in coaching clients.
Despite these challenges, participants were unanimous in their view that moving clients towards a planning-based relationship focused on improving financial wellness will, in the long run, be more rewarding for clients and their advisers.
How can platforms and providers help?
By supporting advice firms in helping educate and increase client understanding of the value of effective financial planning and how this can improve their overall financial wellbeing
