Piercing the Surface

Developing a Financial Planning proposition can seem like a huge undertaking. But if your focus is already on achieving good outcomes for clients, you have the core foundations already in place.

Tackling everything at once might seem too big a task. Breaking down the process and identifying what you need to do to start focusing on client needs is a good way to start.

Speaking to other financial planners, and asking for advice on how they went about it, is a great idea. The Financial Planning community is always willing to share. I started thinking about how I needed to work differently in 2016 when I first decided to enter the Chartered Financial Planner of the Year Award. I wrote the personal statement, then went on to the technical case study and to be quite honest I massively underestimated the amount of work involved. When I got to the interview process, I felt completely out of my depth.

Why should I be Chartered Financial Planner of the Year?

In all honesty, when I first had my interview in 2016, I couldn’t answer this question properly because at that point I genuinely didn’t believe I was a good enough Financial Planner. The questions that the panel asked, made me realise I wasn’t actually doing planning to the level that they were looking for. Following a conversation with the 2016 winner, Kate Gannon, I read two books which had a big impact on me: Start with Why’ by Simon Sinek and The One Page Financial Plan’ by Carl Richards. I read those books and thought, I definitely need to be thinking more about the process I’m going through with clients because it felt too transactional.

My strength is client service, I really look after all my clients; I’ll respond quickly, I know lots about them but as I started thinking about the work I was doing and the discussions that were taking place, I realised that my client conversations weren’t really piercing the surface.

I joined nextgenplanners.co.uk in late 2016 and the best thing that I have got from that community from a personal perspective is the ability to be part of a community of financial planners who are willing to talk about their own challenges and successes and to share ideas without judgement. You get a really good spread of different views on things and there is no one right or wrong way. I noticed there were a lot of similarities in people who have been in a transactional type businesses who then decided either to set up on their own, or make changes in their business to have a focus on Financial Planning.

At that point I had been using cashflow modelling on an ad hoc basis with clients.

We weren’t using it with all clients, we were using it for specific cases. Listening to the Maven Money podcast by Andy Hart made me think completely differently about why planning really needed to sit at the heart of my conversations with clients. Because my initial training was with a big wealth management firm, conversations had focused more on the investment strategy, returns, performance and risk. You’d meet a client, maybe they’ve got money invested, or they were thinking about investing for the first time and that was the main focus of the conversation. Having conversations around ‘this is how your investments have performed’, ‘this is how we manage risk’ or ‘this is how we compare to the benchmark’ were normal day to day conversations.

But, if you think about it, the majority of people actually come with just one basic question:

“Am I going to be okay?”

It was when I shifted the discussion about investments and made it a small part of my conversations with clients, I immediately saw a change.

Instead of asking about investments, pensions and savings, it became about …

“What’s is it all for?”

It became more about having a timeline in place and setting some specific goals around that.

“So, you want to retire at this point, can you explain more about that?”

And then people naturally start talking about why …

“I’m actually really stressed.”

“We’ve gone through this restructuring in the business and now I’m having to do a lot more in this area, whereas I actually prefer working in this area.”

“My partner has reduced their hours, I’m quite jealous, I’d like to do the same. I don’t know if it’s possible.”

These are simple things. I started probing more when I talked to my clients. I really listened to what was being said and why. Practice mde it easier to ask the right questions.

Once I started to concentrate on opening up conversations everything shone in a new light …

“How do you feel about where you are heading?”

“Is this something that is particularly bothering you?”

“What would you like to change?”

You need to help clients find what the goal is, not everyone has a clear sense of where they want to be.

I’ve got one client who decided to retire at 65. That was the age everyone retired within his office. I met him in 2015. We did lots of Financial Planning to set him and his family up for a comfortable retirement but he couldn’t connect with it. We carried out cashflow modelling with him. We ran various scenarios but it was all about the numbers; nothing was linked to a goal. It was only when I changed my questioning that I recognised that it was because he needed help to really uncover his goals. He had been working towards retirement at a set point because that is what he felt he should do but he had never given himself time to think about what his personal goals were. Now my focus has moved from the numbers to the goals, he and his wife are far more engaged. At first it didn’t feel natural to me to be talking about stuff which isn’t always tangible.

“So how do you feel about this?”

“What are your aspirations? Your goals?”

It felt a bit too fuzzy and emotional. It sounds ridiculous when I say it now because obviously finances and emotion are absolutely inextricably linked. But because my focus was on more tangible numbers, it felt like a big leap to suddenly change my entire approach and it didn’t feel comfortable. The more I understood about lifestyle planning, I realised the full George Kinder style approach was not a natural fit with me or the majority of my clients. I learned that you don’t need to replicate someone else’s style, you need to find what works for you – above all else it is important to be genuine and to be your authentic self. There is no exact or perfect way to approach Financial Planning. There is plenty of information out there about how to have great conversations with clients. I take bits from each source and turn it into what works for me.

Focusing on planning and creating tangible benefits helped me develop deeper, more enjoyable client relationships. It also …

  • Drives more referrals
  • Retains clients over the longer term
  • Provides a means of client succession by working with families
  • Provides access to the next generation
  • Helps to safeguard long-term income.

Within a 12 month period, I saw big increase in client referrals to about 55%. From a business perspective, that’s a massive leap.

This was my confidence builder.

It became less about the solution and the underlying investment strategy and more about …

“If we put this plan in place, it will help you achieve this, this and this, and by this date.

“If you think achieving all these goals is valuable, this is the fee”.

I got more buy in for the level of fee and I found it easier to pitch the fee.

In the past, if you were just taking this money and investing it, you’d quite often get into a beauty parade pitching against other wealth managers. That became about price.

I deal mainly with business owners: negotiation is in-built.

In early 2018, I met with someone who was meeting with two other advisers, after selling their business. I was the only one who did cashflow planning with them and spent time understanding …

“You sold this business, what does that actually mean?”

He needed to find what he was going to do next. His wife was the one that worried about the finances the most and had managed them so far.

Her concern was …

“If he’s not working, what will we do? What does this mean in 10 years’ time, when the children want to go to university? Can we do all these things we want to do?”

It was about providing peace of mind, confidence and strategy.

Going back maybe three years, we might have gone straight to, “Let’s review all your pensions and investments.” I suspect that’s what the other two advisers said.

Now my focus is on where are the clients now and where do they want to be? Because I’d spent a lot of time with them, getting to know them, what they wanted and where they wanted to be in the next 5, 10, 20 years, the fee was quite a bit higher than the other people I was pitching against.

The client thought about this for a while. It’s not just a new way of working for advisers but it can be a new way of working for clients – in this case they had always had a transactional relationship. We had entered new territory for them so they needed to think about what it all meant.

When we had another meeting, I couldn’t gauge their interest. I said …

“This is about the plan and if you don’t get on board with the plan and recognise that’s where the value is, this isn’t going to work. So maybe I’m not the right adviser for you.”

In that same conversation they said …

“You are the person we want to work with.”

They explained that it was the biggest decision they have ever had to make and they needed to feel really comfortable. I completely understood. Ultimately I was appointed because I had evidenced that the value was in the plan and that this was about a long term relationship, regardless of what markets are doing! You can always change investments, strategies and other things, but at a core level, if there is a plan in place that is being regularly reviewed and that everybody understands, with a clear focus, that is the most valuable aspect.

The fee was £18,600; £12,500 for the review, the balance for implementation.

I don’t want to get into discussing the right fee model. I think everybody has to do what’s right for their own firm, for the work they are doing and what sits well with their clients. We have to take into account that every business is different, we have different fixed costs, different expertise and we deal with clients who have varying needs.

We need to speak about fees so much more openly. It is important to demonstrate what the value is for the fee we’re charging.

With more focus on technology, being able to access certain solutions online means part of the process is becoming commoditised so it’s more important than ever that we are able to articulate the value we’re providing for a fee. Otherwise we’re in danger of getting into a situation where we’re trying to compete with something that’s being commoditised, which is where we were pre-RDR.

I continually challenge what I’m doing.

I still look at what others are doing and I want to keep learning and evolving. I recognise that there are far more experienced and intelligent people in this profession who can help me be the absolute best I can be. I’m really passionate about what I do. I want to create good outcomes for clients.

I’m really keen to continue working closely with my accountancy colleagues, to get them into the frame of mind for helping people as early as possible so that we can set them on the right track. This is really important.

The earlier we can start working with clients and getting them into good habits the better. I want to be able to help people make the right decisions earlier on because I can see the value it’s going to add long term. Those clients become very loyal. They will recommend us to other people because they’ve experienced planning over a longer period of time as they transition through different life stages and you’ve been able to help. The value you bring is massive.

What really drives me now is seeing younger planners coming into the profession. Free from the baggage of transactional advice. They are choosing Financial Planning because they’re interested in the outcomes for clients. They are interested in being part of a business that helps people achieve their aspirations. We are taking 10 graduates a year at the moment and I find it so refreshing to see the next generation of Financial Planners coming through with this attitude.

Our operational structure

Behind each Financial Planner there is an Assistant Financial Planner and that is someone who’s come through our graduate scheme.

The scheme runs for 4 years, with year 1 and 2 focusing on building their understanding of financial planning, completing R01-6, getting to grips with report writing and understanding products as part of a solution. Years 3 and 4 are spent understanding why we do what we do and the impact that financial planning has on our clients, this is backed up by completing exams to get them on the road to becoming Chartered, ensuring their technical knowledge is at a high level and soft skills training so they will be ready to engage with clients when they are signed off.

Between the Financial Planner and the Assistant Financial Planner we have a Paraplanner, who is fully involved in the Financial Planning process. We’ll go through all of the notes from the meeting, explain the plan and where we want to be. We go through cashflow and then they will put the report together. It’s a collaborative process. The Paraplanner will challenge us, searching for things we may not have thought of and considering possible alternatives.

Centrally we have a team who process all our administration and handle the trading. Then we have a research and development team whose job it is to do all research of product solutions and we have an investment team based in London who are purely focused on strategy, picking the right investment funds and solutions so that as Financial Planners we don’t need to be thinking about that a granular level. Then we have a separate compliance team.

This structure means that as a Financial Planner we can spend more time with clients.