Your role as a financial therapist

I really think the importance of the role that financial planners play in the lives of your clients cannot be highlighted enough… To think of your role solely in terms of products, investments and even financial plans simply doesn’t do it justice. Each of these are important, but in terms of the lifetime benefits that clients will get from dealing with you, they are simply the tangible means to bring your value into the open.

Where clients encounter the most value is in the psychological and emotional benefits they get from you in your role as their mentor, their guide and yes, their financial therapist. While it might not always be expressed in tangible results in the endless research we see about the value of working with a financial adviser, the benefits are irrefutable.

People want direction

We gain peace of mind when we have clarity in our direction of travel, or what we are trying to accomplish. Having goals in our life is healthy, giving us motivation and an aspiration to achieve. A good financial planner helps clients identify their goals in life and then gives them the roadmap to achieve them, in the form of a financial plan. This clarity of objectives gives clients direction, as opposed to the fog of uncertainty experienced by people who have no aspirations or idea about where they are going.

Advice conversations aid collaborative relationships

I wish I had a euro for every time an adviser has told me a story of a client in a meeting saying to their spouse something along the lines of, “I never knew that was important to you or you thought that!” Deep financial planning conversations will often uncover viewpoints and thoughts that have either not been considered, or which one partner has not openly articulated.

As these new perspectives are brought out into the open and addressed, they result in enriched and more collaborative discussions about money, and even life in general, into the future.

Clarity breeds confidence

In the most recent 2023 Value of Advice report from Brokers Ireland, 58% of people feel more confident and in control of their finances having accessed financial advice. You will find numerous other studies globally that back up these findings. Of course there are financial benefits of receiving advice, and hey, who doesn’t mind having a bit more money to invest or spend? And that is aside from the advice probably resulting in less tax being paid, better structured debt and greater lifetime income and wealth. Each of these are valuable and tangible benefits.

But the real magic comes from people gaining satisfaction and clarity about their financial situation, and from being in control. Knowing their money is being optimally managed, provides mental wellbeing. That gnawing uncertainty of not being in control and making poor money decisions is removed through sound financial advice.

People like to be listened to

This might sound obvious, but we all encounter situations in our lives where our voice is simply not heard. This might be at work, when dealing with a bank or sometimes in a medical situation. The so-called expert on the other side of the table isn’t really interested in what we think and is working from their own well-honed script.

The most effective financial planning conversations are those based on carefully crafted questions and deep listening by the adviser. This is where those hidden, key objectives or values are brought to the surface, which then become centrally embedded in the financial plan. Then the client really feels like they own the plan, that it is theirs and theirs only. So whether it’s about some mad dream the client might have, or gaining crystal clarity about their investment values and preferences, uncovering these can turn good meetings into life-changing conversations for the client.

Regular progress reminders reassure people

Regular review meetings provide ongoing reassurance to people. When reminded of where they started from, where they are trying to get to and where they are on that journey reinforces those positive vibes. We all like to see that we’re making progress in every area of our lives, whether that’s in relation to our career, our finances… or even our golf handicap.

So, do you think your role is as a financial expert? If that’s all you think, I respectfully suggest that you are seriously underselling yourself.

Develop your Soft Skills

As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.  This final action is probably the most important – developing your soft skills.

In 2021, 194 advisers from Ireland, the UK and South Africa were asked about their interpretation of value.[1] They were presented with a list of 20 skills and attributes and asked to choose their five most important ones, within four categories:

  • Soft Skills
  • Building a Financial Plan
  • Putting the Plan into Action
  • Ongoing Service

Empathy was ranked as the most important skill or attribute by 76% of advisers. This was the clear leader, ahead of Goal Setting (49%) and giving clients Peace of Mind / The Gift of Time (47%). What is noteworthy is the importance placed on soft skills as opposed to technical expertise.

These findings are consistent with the anticipated shift in focus of client propositions away from technical and product areas to instead supporting clients by providing valued financial guidance and ongoing behavioural coaching. This will require an extension of the existing skillset of some Financial Brokers.

Some Financial Brokers may need to review their own ability to have excellent, emotional and empathetic conversations. Today it is relatively commonplace for advisers in the UK and further afield to do courses with organisations like the Kinder Institute of Life Planning,[2] to complete relevant diplomas and to actively work on improving their soft skills.

Do you need coaching in these areas?

 

Action points for you

  1. Identify the soft skills that you need to carry out your role effectively and get relevant coaching where needed.
  2. Embed these skills into the DNA of your Financial Broker business, placing emphasis on the use of them as much as technical skills.
  3. Train every team member and reward soft skills development.
  4. Practice relentlessly across the team using observation, role plays etc.


[1] PortfolioMetrix – The Insider’s Guide to The Value of Advice, 2021

[2] https://www.kinderinstitute.com/

Build the best team possible

As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.

 

We now turn our attention to your people, who are the heartbeat of your business. With many Financial Broker businesses, this starts out with just the business owner, and then expands in line with the growth of the business.

Looking out to 2030, the expectation is that small Financial Broker businesses with one or two advisers will need to have a very good customer service executive who is qualified and willing to advise clients too. This person is a crucial appointment, as it is likely they will interact with every client, and potentially be the sole point of contact for some.

With the need to deliver broader and deeper advice in the future, you as the Principal of the business will only be able to dedicate your time to higher value clients. The expectation is that the 80/20 Rule will continue to apply, with 80% of income coming from 20% of clients. These are the clients who need to get the majority of your time and attention. The customer service executive (or your number two) will need to be able to support you in the delivery of exceptional service to these higher value clients, as well as providing light-touch advice when required to lower value clients. The service to these lower value clients in the future may predominately be through digital channels.

Many Financial Brokers will have greater growth ambitions and wish to scale their businesses. They recognise that with their own time valued at €X per hour as an adviser, there is potential to recruit administrators, compliance and marketing people at a fraction of this cost. This enables the principal to spend their own time only on high value, client-facing activity.  As well as achieving the growth ambitions of the business, people are then working on activities to which they are most suited, which increases efficiency and creates a more enjoyable working environment.

For a Financial Broker at the very outset of their career, or indeed in the run-up to retirement, being a sole practitioner might make sense. However, for a Financial Broker who is planning to be in business for the long term, it is prudent to plan to achieve efficient scale.  It is anecdotally suggested that in the Irish market, efficient scale can be achieved in a Financial Broker’s business with as few as five staff. This typically comprises two advisers and three support people (administration, compliance and marketing).

For firms in the financial planning space and to free up the time of the client-facing advisers, an efficient paraplanning capability will be needed – either delivered in-house or outsourced.

Having appropriate team members that clients can relate to and engage with is important too – this may be a younger adviser to deal with younger clients.

 

The steps to take

As you consider the future of your business and achieving your strategic objectives, the basic steps to take in relation to building the optimal team are,

 

  1. Based on your growth ambitions, identify the efficient scale of your business. Then identify the characteristics of the people you need – the future success of your business will be determined by the quality of the people in it.
  2. Recruit people who are qualified or willing to become qualified to carry out their role effectively, both in advice roles and support roles.
  3. Carry out a skills audit regularly, identifying weaknesses or skill gaps in the team. Address these gaps through a continuous training programme.
  4. Motivate and reward the team for the identification and delivery of business improvements, making this a key performance indicator for everyone.

 

Do you want to reach a younger audience?

As an important element of the research completed for Brokers Ireland on “The Evolution of the Broker Market 2030”, we identified 12 areas to be considered by Financial Brokers to help prepare your business for the changing market environment.

 

We have considered previously the importance of developing the best proposition and services for different groups of clients and prospects. We now consider the next action identified in the research, which focuses on encouraging younger consumers to engage with Financial Brokers, as this has always been a difficult challenge. However, bringing in younger clients is very important for advice businesses. A balance must be reached between older clients who are currently profitable but may be in or nearing the decumulation phase and having a sufficient number of younger clients who may not be very profitable today but will be in the future.

 

To attract younger clients, the services you offer will need to be scaled down to make them attractive to younger potential clients and viable for you to deliver. This may mean less frequent reviews, working remotely with clients instead of face-to-face and enabling clients to carry out some tasks themselves using technology. Financial planning and product solutions are needed by and can hugely benefit younger people: it is just that their objectives and goals are different.

 

It is widely accepted that a Financial Broker’s client base broadly reflects themselves, particularly in terms of age. If you are now in your 50s or later, are you likely to attract younger clients? If you believe this is unlikely, maybe it is timely to bring a young adviser in to your business. A young adviser can probably engage better with a younger audience and if it is early in their career, it is likely that their earnings expectations may be more realistic and affordable for your business.

 

Social media is not optional if you want to engage a younger generation. For example, Instagram has emerged as a good platform for connecting with younger audiences through mainly educational content.[1] It should be noted that the content required for this platform needs to be very different to that shared with business owners and high net worth individuals on LinkedIn and Twitter. Attempting to engage with younger consumers on Instagram etc. requires carefully developed and bespoke content.

 

However, a further challenge to be considered is that the wealth in Ireland today is in the older generation – these people have property, good pensions and are wealthy in comparison to other generations. But this wealth will be distributed to children and grandchildren in the coming years. Research has found that more than 70% of heirs are likely to fire or change their adviser after receiving an inheritance.[2] This is a significant challenge for Financial Brokers when they consider their ageing clients dying, and their assets / trail commission being reduced as a result.

 

Now is the time to develop a proposition to deal with this challenge. This will include engaging with the children of clients through involving them in appropriate advice conversations around their parents’ wealth (with the permission of parents), inviting them to events and engaging them through content marketing. You need to establish your credibility and value in the eyes of the children, long before the assets move to them. The starting point is actually getting to know the children now.

Building trust takes conscious effort

I recently shared the most relevant findings for financial advisers in the Edelman Trust Barometer 2023, in which we saw continuing challenges for the financial services industry in relation to trust. As we all know – without absolute trust in you and the services you offer, strong client relationships will never be forged.

 

I got a lot of feedback in relation to this article, thanks for all your likes and comments – much appreciated as ever. A few advisers have since asked me what they need to do in order to build trust. So here goes – my thoughts on a few ways that really help to build trust.

 

Be visible when the going gets tough

This is so relevant today, with a volatile and unpredictable economic and investment climate. Now is not the time to go to ground and hope that clients won’t ring about their investments that may be going up and down at an uncomfortable rate. Instead now is the time to be calm, show your leadership qualities to clients and remind them that their financial plan will deliver the desired outcomes over time. Yes, acknowledge the discomfort caused by volatility in the markets today, but remind clients that this will pass. Your visibility and reassurance will provide comfort to clients, and will help build their trust in you.


Communicate how you work with clients

One of the most important ways to build trust, particularly with potential clients, is by communicating really clearly how you will actually work with them. Many people only sort of know what a financial adviser does – something to do with pensions and life assurance? Let potential clients know the problems you solve and the outcomes you achieve for them. And then explain how you will work with them. You can give huge levels of comfort by walking the client through your advice process in detail, showing them what to expect and the value that you will add. This will help to remove any doubts in their mind.


Provide client testimonials

Continually seek out client testimonials, they are really important. In my book, you need to seek permission to use the client’s actual name (and logo if a company). Testimonials from “John H, Dublin” don’t really count – in fact someone might suspect they are made up… Genuine client testimonials are really powerful – who can advocate for you better than people who you’ve helped in the past, whose lives you have potentially changed?


Seek recommendations on LinkedIn

LinkedIn is a really important platform for financial advisers; it’s where many prospective clients will check you out before picking up the phone to you. After all, when they Google your name, the chances are that your LinkedIn profile will appear high up the search results. Recommendations from clients on your LinkedIn profile are a very powerful endorsement of your services, so look for these at every opportunity. They are great trust builders.

Presence in mainstream press

Some advisers have built up great profiles by regularly appearing in “Opinion” columns in national newspapers and some even building positions as regular commentators on TV and radio. These are great for building trust, as they demonstrate your industry knowledge and authenticity as a voice worth listening too.


Your qualifications

Sounds simple? If I was a CFP, I’d tell everyone at every opportunity! Why not advertise the fact that you are part of a highly qualified cohort? Prospective clients will value the fact that you are investing in yourself and are willing to keep learning in order to stay at the frontier of providing the very best financial advice. It will also help you to achieve high levels of trust among clients.

 

There are of course many more ways of building trust; advertising any awards that you win, communicating your opinions with your clients via newsletters and being active on social media. Hopefully the ideas above will give you a few pointers as to how you can continue to build trust with your clients and prospective clients.

The importance of structures in a family advice business

I became aware quite recently of a family business, thankfully not in the financial advice space, that had failed. Their products were excellent, their target market was big and while there were some competitors, they weren’t a huge threat in reality. This business should have succeeded but didn’t.

I was very fortunate to be given a candid review of why the business failed by one of the leaders of the business. As we peeled away where things went wrong, it became clear that a lack of structure in some key areas sat at the heart of this failure.

Here’s what I learned about what went wrong in this family retail business and how these mistakes can be avoided in family financial advice businesses.

 

Family businesses can be too informal

I see this quite frequently. Usually it’s a father who has been a financial adviser for many years. He is delighted then when his son(s) and/or daughter(s) come into the business. This happens quite informally – it might start with some summer work, in some cases it’s a case of “come in and give it a try and see if you like it” – always very well-intentioned on all sides. This then turns into something permanent and the business motors on, now with a parent and children involved. It all sounds good so far!

However this is where the family retail business started to slip off the rails. In hindsight, the dynamic remained very informal. There were no structures put in place that you would expect to see in a normal shareholder business. The following structures might have helped them succeed, and I think every family financial advice business should consider implementing them in their business.

 

Goal setting is key

This starts with a clear vision for the business. What is it that you want to achieve through your financial advice business? What is your guiding “North Star”, that when some members of the family become uncertain about changes in direction about to be taken, you can all agree that it is (or isn’t) bringing you closer to that ultimate vision?

Once the vision is set, it is important that the values of the business are identified and articulated. These might evolve and change over time – this in itself emphasises the importance of returning and reviewing them periodically. These should be standards for the business on which you’re not willing to compromise – for example, these might be around fairness and delivery standards to customers or how non-family staff are treated. All family members need to to agree them and abide by them.

And then you agree the shorter-term objectives and goals of the business, just as is done in any other shareholder business.

 

Governance keeps you accountable

How this is structured depends on the preferences of each family business. The key is that governance is carefully considered, and a conscious choice made, as opposed to just drifting into some informal governance structure.

For some family businesses, a “family leadership council” might be the best way to proceed. This is a group of some / all of the family who meet regularly, follow a defined agenda and document outputs and actions as to the future strategies of the business.

For other businesses, the family members might acknowledge that external oversight is needed, to properly challenge their own thinking, prevent “group think” and to sometimes act as a referee! There is no weakness in bringing in external people to help reach the right decision – I know that my sisters and I sometimes struggle to agree on something as simple as a restaurant for family dinners… External people can also bring a very useful and different perspective, where family members can sometimes get trapped down in the weeds of the day-to-day running of the business.

 

Clear communication keeps everyone on the same page

The final piece is to ensure everyone is aware of the challenges and issues facing the business and stays on the same page. Structured communication is key. This is particularly important in a family business, where some siblings might be closer than others, and of course some of the family members might be living under the same roof. You must be careful that the important conversations don’t take place at the dinner table, to the exclusion of other family members.

A family business can be the most rewarding experience, one of shared vision, collaboration and growth and shared satisfaction as you achieve your goals. Put the necessary structures in place to ensure these positive outcomes become the reality.