Adviser Stories: How an outburst changed my perspective on money
07 November 2018 | Practice Management
I started my career as a financial consultant, on a commission-only basis. My manager at the time was adamant about the importance of knowing your client, so the fact-finding we carried out on clients was considerably advanced for 1982. At 24, I started my own independent brokerage business. It was a success, but I was working all hours and hardly seeing my kids. When my mother died suddenly in her fifties, it was a huge shock to me and to my father. My father had also worked all hours in an attempt to better provide for the family, but I could see now he was filled with regret for having spent so much time away from the family. It was a real wake-up call for me.
This became apparent when I visited some clients soon after. They were a couple in their late fifties, busy with work, and when I asked them what they wanted to do in life they used the phrase ‘one day’ at lot. One day we’d like to do this. One day we’d like to do that. I surprised myself by becoming quite agitated. I even slammed my fist on their table.
‘Why not do these things now? You need to do these things now!’ I shouted at them. I realised my outburst had a lot to do with the death of my mother and witnessing my father’s regret. I apologised to the couple, but as it turned out, my outburst totally changed their outlook – and their life.
This episode prompted a realisation. My purpose was not to flog products on behalf of the industry, but to help clients understand how to live the best life possible with the money they have. In order to do that, I needed to tell clients what I call the Truth About Money.
The Truth About Money isn’t about whether one fund is better than another fund. That’s what the industry wants you to think, but that’s not what really matters to people. The Truth About Money is helping clients to understand what needs to happen financially to live their life the way they want. It’s about knowing ‘how much is enough?’
As an adviser, of course I knew how to manage investments and pick products, and I’d take care of all of that as and when necessary. But what I got good at communicating was my real purpose – to help clients get and keep the life they want – without ever running out of money – or dying with too much! It’s not about selling products, it’s about lifestyle planning: financial planning with an end in mind – helping clients get a great life. I believe so strongly in the concept of lifestyle financial planning that I now coach financial advisers to deliver this high value service. My companies, Inspiring Advisers and Life Centered Planners, are both about inspiring advisers to focus their service on what matters most: helping clients to live a great life. I see three aspects to an adviser’s job:
- Life Planning. For this stage, you really need to get to know your client. Where are they now? How did they get to where they are now (their story) and once you know that you can then discover what they really want their future life to look like.
- Financial Planning. This stage is about plotting all resources, assets, income and expenditures now and into the future. This is where comprehensive cash-flow modelling is used to show clients what their financial future looks like and what needs to happen to get the life they say they want.
- Financial Advice. If client’s financial plan indicates that they need a financial product or investment, then and only then should we talk about them or recommend one. Until you’ve done the first two parts of the job, how can you possibly do the third?
Many advisers spend most of their time on the third part – because that’s where they think they earn their money. But this is what the industry wants advisers to think. Building a relationship with a client and working out what’s important to them is what is most critical to helping them achieve a financially successful life. So it’s the first two parts of the job that are most important, that’s where the real value is.
A client will often tell you something they’ve never told anyone else. An adviser’s ability to use this information to help a client build the most financially successful life possible is where advisers add value. Focusing less on products and more on the big picture creates better, more long-lasting and more profitable relationships with clients.
Paul Armson, CEO and Founder of Inspiring Advisers Limited, Co-founder of Life Centered Planners. Vanguard’s Adviser Stories are a series exploring adviser-client relationships.
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The opinions expressed are those of the individual author and may not be representative of Vanguard Asset Management, Limited.
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