Should The Majority Of Advisers STOP Calling Themselves ‘Financial Planners’?

I believe the ‘Financial Planning’ community has a problem. It needs to get its act together, and fast. Here’s why…

Towards the end of 2014 I did a fair number of speaking slots, many of which were on the IFP circuit. I’ve been showing a few slides lately from some research done in the US, that states that MOST Advisers who call themselves financial planners do so because it adds credibility and suggests a service offering that justifies increased fees. The research goes on to say that this is a scam and that the vast majority of ‘Financial Planners’ don’t actually do much, if any, financial planning. Their service (and only goal) is to accumulate assets / flog mutual funds and rake off their 1%.

So, as Mr. Marmite, I thought I’d ask my audience(s) to be really honest. I asked how many of them call themselves ‘Financial Planners’? 100% of hands went up. Then I asked how many ACTUALLY do Financial Planning, day in, day out, with their clients. (i.e. comprehensive fact finding, full analysis of assets, liabilities, current inflows, future inflows, tax analysis and, most important of all, full analysis of cost of current and desired future lifestyle, thorough financial forecasting with decent cashflow modelling software using prudent assumptions, and then identifying (with the client) whether they are on course to run out of money, or die with too much, etc, etc. BEFORE they talk about products or investments).

How ever you describe it, less than 10% could say that proper FP is their daily offering. (Funnily enough the majority of those 10% are members of Inspiring Advisers – but that’s not surprising). The vast majority agreed that, ‘through no fault of their own’ they were stuck in the ‘Transaction Trap’.  They’re busy (often busy, busy, busy!) running around fixing short term problems, doing transactions, and twiddling with investments. They ain’t doing financial planning.

I find this incredibly shocking. After all, the rooms were full of ‘Financial Planners’.

My belief is that we’re heading for a big problem – if Advisers just change their name from ‘Financial Adviser’ to ‘Financial Planner’ – but then don’t change what they actually do, then it follows that in 5 – 10 years time ‘Financial Planners’ will have the same lousy reputation as ‘Financial Advisers’. Harsh, but true.

We have to do something about that.

So, let me give you an example to explain why I get so frustrated, and why you should too – IF you believe in genuine Financial Planning.

The following story is really sad.  But, it might explain my ongoing (often outspoken) frustration with the ‘Industry’ – how it messes with the heads of well meaning Advisers – and in particular my frustration with Advisers who sadly lose out by missing the point altogether whilst failing to answer their clients BIGGEST questions.

I hate going to funerals at the best of times. But I’m reminded of when, with tears in my eyes, I held the hand of a newly widowed client as we both looked down into her late husband’s grave…

I’d recently witnessed how this lady and her husband had ‘suffered’ in the hands of a well qualified (Chartered and Certified) Financial Planner who, a few years earlier, had happily taken a year’s full ISA investment off the couple, then in their early sixties. As you’ll see, he had failed to identify their REAL needs.

Don’t worry. This is not some sort of mis-selling scandal.

It’s worse. 

Just before this client died, they’d been introduced to me. They wanted to know,  for sure, that SHE was going to be OK, financially.

At our first meeting they passed me a copy of the Adviser’s recommendations from a few years earlier. This Adviser had obviously spent hours researching funds; he’d matched their risk profile perfectly, he’d produced a beautiful Reason Why / Suitability report to document his recommendation – and he’d invested his clients money into an ISA in a timely manner. I noticed he’d earned about four hundred quid.

“So, where’s the problem?” some Advisers might ask.

Here’s what the Adviser didn’t do…

Because he asked the WRONG questions, he had not identified THEIR most important need: that these clients, at that time, were both still working in a job they hated.

All the Adviser had done was satisfy his clients’ immediate need – for an ISA. So he HADN’T done any PROPER financial planning.

So, he didn’t ask the right questions, he didn’t identify the cost of their current and DESIRED lifestyle, he didn’t crunch any numbers, he didn’t do a meaningful Lifetime Cashflow (note the word ‘meaningful’)…

And so…

…he didn’t identify that, at that time, they could, in fact, have retired immediately and lived happily ever after – without EVER running out of money.

They were, what I call, a ‘Just Right’ type of client: they already had enough money for the rest of their life – but they didn’t know that!

Here’s the worst part….

Sadly, three years later, ‘Mr Client’ – still stressed and working in a job he hated – found out he’d got a brain tumour – and just 6 months to live.

Result: three years of his life had been lost, spent working in a job he hated.

Worse! He’d been working when he could have been playing! In fact, these clients could have easily afforded to retire at least FIVE 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’d wasted his precious time working.

I believe their Adviser seriously FAILED them. What do you think?

Should they sue?

Could that client still be alive today IF that Adviser had removed the stress and worry?

He didn’t do any PROPER Financial Planning – even though he was parading as a ‘Certified’ and ‘Chartered’ Financial Planner – and still does to this day. (I see him occasionally, poncing around at IFP events).

Now look, this Adviser was well qualified, well meaning and is, 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, what I call, 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 this Adviser will no doubt say:

“But they only wanted an ISA!”  “…they didn’t want ‘financial planning!’” …or the old classic: “They didn’t want to pay a fee!”

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 a PROFESSIONAL Financial Planner – or an order taker?

Are they just peddling funds on behalf of the investment ‘Industry’?

If so, they should STOP calling themselves a ‘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! That is WHEN they find out and understand that you can actually do this!

In fact, isn’t it our responsibility to do this?

When you choose to tell clients the ‘Truth About Money’ – by delivering Lifestyle Financial Planning – there will always be a little bit more work. You need to ask more questions. You need to crunch some numbers. You need to do a ‘little’ more than clients expect. You need to communicate your service in a different way. But it’s worth it! That is what is needed in order to show clients what their financial future really looks like.

Clients won’t understand (or pay for) Financial Planning until they EXPERIENCE it. Your job (IF you are a PROPER Financial Planner) is to help them EXPERIENCE it!

That’s when clients take action, and that’s when they engage with you and your service.

Clients absolutely love it and because of this will happily agree to you being well paid – every year.

So, let me ask you a question.

Do you believe in PROPER financial planning – or not?

Do you deliver it to EVERY single client?

Or, do you have good intentions, but find yourself getting ‘stuck’ in the ‘Transaction Trap’?

(If that’s the case, don’t worry – you’re not alone. It’s happening to ‘Financial Planners’ everywhere.)

Let me say again, clients won’t understand – or want – Financial Planning until they EXPERIENCE it. That requires that you communicate your service in a different, more compelling way. It also means you need to ask better questions.

The good news is there’s a formula. 

Would you like to break out of the ‘Transaction Trap’  forever and start delivering a consistent, duplicatable service that truly knocks clients socks off?

Or do you want to be like most Advisers and just peddle products on behalf of the ‘Industry’?

There is a world of opportunity out there for those of us who choose to do the job properly, who choose to do the opposite to most Advisers. In fact, do this well and you can really, really clean up. (I can show you how).

It’s time to STAND UP for PROPER Financial Planning.

If you believe in PROPER Financial Planning can I ask you, please, to help us stand up for it by coming to BACK2Y – The Alternative Financial Planning Conference. It’s for Advisers who want to be part of a Profession, not part of an ‘Industry’.

If you’d like to find out more about making PROPER Financial Planning the focus of your service – so you get more of the right clients and earn bigger and better fees – then, just grab yourself a seat at BACK2Y – The Alternative Financial Planning Conference.

It’s being held at the ICC (The International Convention Centre) in Birmingham on 6th March 2015. Last year we had a blast. This year we’ll do the same.

There’s no product providers present. No sponsors. No free booze or free golf balls. No ‘Industry’ ‘stuff’ messing with your head.

Instead, you’ll get GOOD, HONEST, PRACTICAL & PROVEN ADVICE that you can take away and implement in your business straight away.

You’ll learn from some of the UK’s leading Financial Planners. You’ll find out how they’ve changed their business in the last 5 years or so, to deliver highly PROFITABLE Lifestyle Financial Planning – and how you can do it too.

You really can do the same. It’s not complicated. You just need the right mindset. And that’s what you’ll learn at BACK2Y.

You can grab your ticket by going here: www.BACK2Y.co.uk

Join us, and let’s change the world of financial services, FOREVER! 

 

 

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4 thoughts on “Should The Majority Of Advisers STOP Calling Themselves ‘Financial Planners’?

  • Spot on. In a similar vein, the term Wealth Management is massively abused. The clue is in the name: the management of the client’s wealth: all of it. It’s about listening, building rapport and trust and offering unconditional advice and most if the time it has absolutely nothing to do with investments.

    Reply
  • If that client had approached the adviser at the end of March, wanting to do the ISA, should the adviser have declined to allow them to do it until he had completed their financial plan?
    You can give financial advice relatively quickly, but you cant produce a financial plan in the same timeframe. And, of course, the cost of the financial plan is much greater.
    Should Financial Planners stop pretending that they can give one off financial advice?
    Paul, you are sounding a bit dogmatic – preaching in this way risks losing the support of those of us that spend our time with clients

    Reply
  • Of course it’s marketing to advisers. Nothing wrong with that. But, if you’re going to charge honestly for financial planning, are you really going to make your fees aligned to funds under management/percentage based?

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  • Wow – I can feel the passion this article was written with. And an excellent article it is – well done, Paul.

    I completely agree with all points raised.

    Whilst I’m far from perfect, I AM a financial planner and it is very important to me to ask the right questions at the right time and to PLAN for my clients.

    In no way an excuse, but I do think that part of the reason why some ‘advisers’ call themselves ‘planners’ are the trade-marked titles of Chartered and Certified Financial Planner.

    One can change from an ‘adviser’ to a ‘planner’ almost by default just by passing more exams, but without making any changes to what they actually do for their clients. There is something wrong with that, surely.

    Reply

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