POWER Planning

Consumer Outcome

CLARITY

“I’m much clearer about my personal ambitions”

To deliver any form of personal financial planning you need something to plan for.

This might sound incredibly simple and obvious, but very few, if any, clients approach a personal finance professional with a clear plan in mind.

A typical client is looking for advice in a specific area. One of your first challenges, therefore, is to try and establish what a client is looking to achieve.

Establishing needs and objectives is nothing new (it’s a Financial Conduct Authority requirement), but the needs and objectives required to sell a product are fundamentally different to those required to deliver personal financial planning.

An objective required to sell a product could be,

“You are looking to invest £100,000 following receipt of an inheritance.”

Advice could be provided on this basis and all regulatory boxes ticked, but you cannot deliver personal financial planning based on this objective.

To deliver personal financial planning, the objective must be based on human outcomes.

By this we mean they must be personal to the client, not generic and never mention a product.

Consumer Outcome

CONNECTION

“I now understand my current financial position”

Once we have clarity, something to plan for, we then need to know what resources the client has to help them achieve their plan.

This is where we form a connection between the client’s desired lifestyle and the money they have.

By resources we mean those things we would typically expect to see in a fact find.

A client’s resources will include, amongst other things: Assets / Liabilities / Cash / Pensions / Investments / Protection / Income / Expenditure / Will / Power of Attorney / Gifts / Trusts / Attitude to Risk / Future Legacies.

To obtain the level of detail required to deliver personal financial planning in accordance with these outcomes, the reason why this information is needed must be articulated. Without this articulation you may not receive all the information you are looking for.

Clients disclosing additional resources after having held a relationship with a personal financial professional for several years is not uncommon and is usually linked to one of two things:

The first is trust. Becoming the trusted professional is more likely to result in greater disclosure by the client. You are more likely to be open and honest with someone you trust.

The second is relevance. A client looking for pension advice may not understand the benefit of disclosing other information (for example, their cash balances) as they will not see the link to the advice they are seeking. They may therefore be reluctant to disclose information they perceive to be irrelevant. Explaining relevance leads to in depth conversations.

From a client perspective simply documenting their resources in a simple, easier to understand format can bring peace of mind and provide greater understanding of what they have and where it is.

From a personal finance professional’s perspective, the more information you gather the more advice opportunities you uncover. This information gathering exercise enables the client to make the connection between what they are planning for, and resources they have available to them.

Both provide significant emotional benefit to the client, but without the detail they will undoubtedly not form part of the personal financial plan.

Consumer Outcome

CHOICE

“I have evidence to choose what I do next”

Once we have established what the client is looking to achieve and the resources they have available to them, we can model various scenarios and demonstrate the connection between them.

Using a cashflow modelling tool to demonstrate various scenarios helps give the client a pictorial representation and vision of what their future may look like. It can also be used help make informed choices over things such as retirement, standard of living, bucket lists etc.

As well as running various scenarios based on the consumer outcome clarity, it is also important to challenge the model. Can it be done better, can it be done sooner, can anything be done to help meet their objectives?

This modelling exercise can create a vision of the future that has been agreed with the client and forms the basis on which the advice delivered in consumer outcome control can be formulated.

Modelling can also be a very useful tool to obtain information from a client that they may have been reluctant to divulge. For some clients it can be difficult to comprehend why certain information is needed, but seeing their future brought to life through the modelling of various scenarios creates engagement and opens conversations.

From a client perspective establishing a model can provide peace of mind over their financial future and the confidence to make financial decisions.

From a personal pinance professional’s perspective an agreed upon model gives us a plan upon which all the advice can be based, making any advice easier to position.

Providing the client with choice opens the conversations and helps them visualise their financial future.

Consumer Outcome

CONTROL

“I am now in control of achieving my ambitions”

Once a plan has been agreed, the next outcome is how to improve the client’s chances of success and helping them feel in control.

Are all the resources available to the client in a good place to give the client a good chance of achieving their plan? What can we do to help the client improve their chances of success. This is where much of the regulated advice sits but positioning it in this way is much easier than a simple product-to-product comparison.

If linked to a personal financial plan our advice changes to, “to improve the client’s chances of success we recommend they transfer their pension”. The link to the plan gives the advice meaning from a client perspective making it easier to position, easier to understand and easier to charge for.

If we expand the concept of improving the client’s chances of success out to all the resources identified in outcome connection, we are in essence giving ourselves a shopping list of advice we believe should be implemented for every client. It can also provide an effective audit trail to demonstrate all our advice, not just that taken up by the client.

From a client perspective linking the advice with the plan brings a greater level of understanding and allows the clients to see what they need to do to improve their chances of success. It also brings the entire advice process together rather than appearing to be one off isolated pieces of advice.

From a personal pinance professional’s perspective, having the ability to know where every client resource is in relation to a plan offers huge opportunity which becomes easier to maximise due to the client’s increased understanding and engagement.

Providing the client with a feeling of control is incredibly valuable and something a client can relate to and will be willing to pay for.

Consumer Outcome

CONFIDENCE

“My plan can evolve with my circumstances”

We all know that client circumstances and objectives change and the assumptions we use in the planning process will invariably end up being out of date.

Regularly revisiting the plan is an essential part of the financial planning and advice process.

It is the long-term relationship that we build with our clients that gives them the confidence that they are on track to achieve their goals.

An annual planning meeting or review should revisit each of the first four outcomes: clarity, comprehension, choice, and control. Is the client still on board with the long-term plan or has it changed? Does the client still have access to the same resources to help achieve the plan?

Once we establish this, we then revisit the modelling of various scenarios and look at how we can improve the client’s chances of success.

We may not and probably will not get to all the first four outcomes with many clients straightaway, and there is nothing wrong with that, but we should continually work towards achieving these outcomes for all clients.

To do this the outcomes need to form part of any initial engagement with clients and planners should revisit them annually. This way, the outcomes are always at the forefront of what we are trying to achieve.

It is also important to remember that your annual planning meeting should not be the only contact you have with a client during the year. Regular touch points increase the level of engagement and strengthens the relationship.

Effective, consistent communication builds trust.

From a client perspective covering the first four outcomes every year, with additional intra year touch points, gives the client confidence that they are on track.

From a personal finance professional’s perspective, revisiting the outcomes (especially control) allows you to deliver good quality financial planning whilst also revisiting your ‘shopping list’ of actions you believe the client should take. If you can centralise your ‘shopping lists’ into a Customer Relationship Management tool or similar you can identify the opportunities available for every client in your existing client bank. This is extremely powerful.

If we can deliver these 5 Consumer Outcomes, clarity, connection, choice, control and confidence we will be delivering consumer outcomes focussed financial planning.