HOW TO BE A FINANCIAL PLANNER IN 2021

Have you ever wondered what makes a good financial planner? In a world where there is so much free information online teaching people how to purchase their own investments and arrange their own insurance, where does the financial planner fit in?

Do you do your own financial planning currently? Maybe you’ve thought of being a financial adviser but you’re not sure how you’d create a valuable service? Or perhaps you are an adviser now and you’re finding it harder to explain the REAL value of what you do?

This article is for anyone who wants to know THE SINGLE MOST IMPORTANT THING that should be at the centre of any financial plan. It also includes my simple 5 Step Process to delivering value with a service that people are HAPPY TO PAY FOR.

A BIT ABOUT ME AS A FINANCIAL PLANNER…

I took my first steps towards being a financial planner in 2003, when it’s safe to say the world was a different place. Social media barely existed, touch screen technology still belonged in sci-fi movies (remember that dial on the iPod?) and the music charts were full of indie hits.

The finance world then seems archaic now; a time before the Global Financial Crisis, when commission payments were how financial advisers still made their living.

This was the world I joined when, in 2004, I was promoted by Portman Building Society from a cashier to a Financial Planning Manager. I was 20 years old and had just started shaving.

After a rocky start, I eventually learned the ropes and became quite good at the job, earning decent money for a lad my age. It wasn’t long though before I got restless and after a brief sojourn in South East Asia and Australia, I became an independent financial adviser.

Everything was good for a while. But then the doubts crept in…

I started to doubt the value I was providing. I always worked hard for my clients and they were happy – no questions were coming from them – but the world had changed since I started doing the job…

There were now direct offerings and robo advice solutions. I knew full well these would meet the needs of some of my clients just as well as I could, for less cost.

Something needed to change, but I didn’t know what. Those nagging doubts stayed with me for a long time. Then the light bulb moment came…

THE DIFFERENCE WITH A TRUE FINANCIAL PLANNER – IT’S ALL ABOUT LIFESTYLE!

I was on holiday, reading a book by a guy called Paul Armson. He had been a highly successful financial planner, semi-retiring at 45 to focus on coaching other financial planners, while spending the rest of his time indulging in his passion of sailing.

The thing that resonated with me, and what made Paul Armson’s approach different, was that he didn’t place any value in the ‘products’ of financial planning…

The ISAs and pensions, the funds and model portfolios… these were just tools in the planner’s tool kit, but too often they formed the largest part of an adviser’s conversation with their client.

The reason advisers would do this is because they’re conditioned to do so by the ‘industry’. These products are marketed to them, and they dutifully sell them to their clients. They talk about their features and their performance, without realising that most people just aren’t that interested.

What they are interested in is ONE thing – LIFESTYLE. That is, getting and keeping their desired lifestyle with complete financial independence, as quickly as possible.

Mr Armson’s skill was in conveying this true purpose of financial planning so that clients saw the bigger picture. Meetings focused solely on planning forward rather than looking backward at how funds had performed… The ‘transaction trap’ was avoided.

How much is ENOUGH to deliver your ideal LIFESTYLE with total financial independence and peace of mind, for the rest of your life, no matter what happens? That’s the single purpose of financial planning.

Paul Armson’s excellent book, ENOUGH?, aims to answer that very question. Click my affiliate link below to order your copy…

 

 

FOCUSING ON THE WHY

It hit me that I had been falling into the transaction trap too.

Of course, I did more than just sell products to people… I conducted thorough fact finds and researched my recommendations carefully. Then, I considered the tax efficiency of my strategies and the appropriateness of the investments, but I had to admit I spent too much time talking about the wrong things…

I was talking about the HOW and missing the WHY. I wasn’t getting people excited enough about the destination; the real purpose of the plan.

The penny had finally dropped.

I decided to change everything about my approach and learn all that I could about lifestyle financial planning.

I had to accept that this would mean saying goodbye to some clients. This type of service would require me to spend more time with each of them, and inevitably the cost would outweigh the value for some.

My ongoing fee income was around £200,000 a year at the time. I accepted that a short-term reduction in earnings might be unavoidable, but I was committed.

The first step was to become really skilled on cash flow modelling software. This is ESSENTIAL in bringing a financial plan to life for people and for demonstrating the potential impact of different scenarios and circumstances.

I use Voyant, which is one of the leading financial software solutions in the world. In my opinion it is the best, but there are many options available.

It took some time, some trial, and plenty of error, but eventually I developed a process that worked…

HOW TO DELIVER A FINANCIAL PLANNING SERVICE THAT CLIENTS VALUE

The key thing is to always remember where the value is…

People perceive the value of financial planning in what it can deliver to them. If you can deliver financial freedom, financial security and financial independence to supply an aspirational lifestyle so that people can enjoy the most valuable commodity of all; TIME, then you are delivering value.

People will pay for value, so the cost of the service needs to focus on where the value is.

STEP #1 – HOW TO POSITION YOUR SERVICE AS A FINANCIAL PLANNER AT FIRST CONTACT

When first making contact with a potential client, you need to be clear about what they can expect.

Usually, the prospect will say something like “I need help with my pension.” Or “I want to invest some money.”

It’s easy to fall into the transaction trap with people, but at this stage it is important to explain that you don’t look at any single area of financial planning in isolation; you only take on clients to look at their situation holistically.

In the first meeting you won’t talk about financial products at all – you’ll simply get to know them, their story, their likes, dislikes and passions, and of course the details of their financial situation.

You can’t be sure at this stage whether you definitely can help them. You’ll say that you will spend an hour with them though, at your expense (never say for free, because that diminishes the value of your time). You’ll explain that this is how you’ll find out if you can be of help.

STEP #2 – RE-ITERATING THE PURPOSE OF FIRST MEETING

When you first sit down with the prospective client, you reiterate what you told them over the phone (or email).

At this stage, you’ll explain that your service has three elements to it:

The first is lifestyle planning – the most important element and the main purpose of that meeting. This is where you help the person in front of you visualise and define how they would like to spend their time (if they were fully in control of it).

The second is financial planning, where you crunch the numbers and create the detailed strategy to achieve the above.

The third is product advice, which although important is probably the least important of the three elements. Sadly though this is where MOST advisers will spend MAJORITY of their time! You will help clients put the right products in place and manage their assets to reach their desired destination.

STEP #3 – EXPLAINING THE SERVICE AND THE COSTS (‘REVERSING RISK’ TO GET PEOPLE TO AGREE TO FEES)

At the end of the first meeting, when you’ve had chance to assess the prospective client’s financial situation, you will explain your service and what working with a true financial planner will entail.

This is also when you will explain your fees, but there is one CRUCIAL STEP to follow here…

If you want to get someone’s commitment to paying your fee, you need to shoulder the RISK.

The time involved in creating a detailed plan is considerable, the value you can provide is MASSIVE, but unfortunately at this stage the prospective client still doesn’t know that.

It’s more than likely they’ve never seen true financial planning before (even if they’ve seen a financial adviser), so you can’t expect them to commit to paying a high fee at this stage. You might get them to commit to a low fee, but you don’t want that!

It’s also potentially engrained in this person’s mind that you will only be remunerated when they purchase some kind of product from you. This notion needs to be well and truly quashed.

The way to tackle this is to say to the following to your potential client:

RISK REVERSAL – THE SECRET OF A TOP FINANCIAL PLANNER!

When you next sit down, it is incumbent upon you to demonstrate, IN MONETARY TERMS, how the value of your advice can EXCEED the cost. If you cannot demonstrate that, then they will not need to pay anything.

“WHAT?!” I hear you say.

“I’m supposed to do all of this work and potentially get NOTHING?!”

It may seem that way, but hear me out…

The above tactic might seem like a big risk, but by this stage you should KNOW based on the person’s situation whether you will be able to demonstrate value with proper financial planning and cash flow modelling.

Sometimes you may discover during the first meeting that your service is not right for the person; usually when their needs are basic and they don’t yet have the means to warrant your involvement.

The best advice you can give here is to point them in a more cost effective direction. Perhaps say you will check in on them in the future to see how they’re getting on.

Personally though, once I’ve been able to assess someone’s situation and judge whether I can valuable, I’ve yet to meet a client whose situation I haven’t been able to improve.

Whether this be through more efficient use of the tax system, or through other cost savings and enhancements identified in the planning process, I’ve always been able to demonstrate monetary improvement.

When you’ve been able to make this assessment, the risk is actually minimal. Psychologically though it is important to the prospective client, who won’t feel like they are ‘tied in’ to anything.

Most importantly though, there has been no mention of ‘products’ and no ‘value transference’. The value remains in the planning, not in the financial products themselves.

STEP #4 – CREATE THE PLAN AND PRESENT IT WITH A WOW FACTOR!

This is where you’ll really create the difference by putting together a show stopper of a financial plan.

You’ll take everything into account and focus on achieving the things that really matter to the client. Importantly, this will be in a timescale that hopefully exceeds their expectations.

When you meet again, it’ll be brought to life by the cash flow modelling software. Goodbye boring sheets of paper! It’s unlikely that any financial planner will have shown them anything like this before.

By the end, your new client will be excited about their financial future. They’ll also be wondering why other financial advisers don’t all offer this type of service!

STEP #5 – IMPLEMENT PRODUCTS (IF NEEDED)

Majority of the time, some financial product recommendations will be needed, but this is done at the end of the process. By this stage, the client will appreciate the purpose of the product more – it will sell itself.

The odd thing you will realise is that when financial products no longer become the focus of financial planning, you will set up more of them than ever before.

People will also want to entrust more of their money to you than ever before. They will know that you are truly helping them work towards something meaningful and worthwhile, rather than just filling a gap.

EASY AS THAT!

So that is the simple process I follow to create massive value, by providing a service that focuses on and delivers what to matters to people… a service they are happy to pay for.

In turn, this provides me with the sort of lifestyle freedom that I want my clients to enjoy.

I would love to get your comments below… Are you a financial planner now? How are you providing value to your clients?

Would you like to be a financial planner? I’m always interested in hearing from people just starting their journey to see how I can help!

Do you look after your own financial planning? How successful have you been with this? Let me know in the comments section!

Until next time, keep planning for financial freedom with your ideal LIFESTYLE at the centre!

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2 thoughts on “HOW TO BE A FINANCIAL PLANNER IN 2021

  1. Hi Chris, thank you for writing this, it’s refreshing to see an advisor share in such detail their own way of working. I am currently halfway through DipFA (have been a mortgage advisor for the last 8 years or so), your method totally resonates and has helped cement the ‘why’ for me. Not to sound like a complete ‘fanboy’ but soaking up all your content, keep up the great work! Cheers, Ryan

    1. Hi Ryan. Thanks so much for your comment. It’s very rewarding when you hear people are getting value from your content. I hope the studies go well for you, and you’ll no doubt have lots of transferrable skills from your mortgage adviser role! I’m sure you’ll get a lot out of providing lifestyle focused wealth management advice, as will your clients.

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