Financial wellbeing the future of financial advice

Future of Financial Advice

by John de Zwart, Managing Director, Centrepoint Alliance

Professional integrity a basic client expectation

View John de Zwart's presentation from FinForward 2017 here. 

The intense focus in recent times on the public reputation of advice and the changes to adviser regulation, licensing and professional standards, has rightly consumed the industry's attention, along with the media and regulators.

I believe the changes will underpin the professionalising of the industry, its public reputation and assure clients on levels of propriety and quality in the advice they receive.

While this plays out in the media, good advice firms have already moved on. These firms understand that our clients are actually looking for a whole lot more in the advice process than just sound technical advice and professional integrity.

Of course you must have the competence, technical skills and product knowledge to give quality advice. You must have a good reputation and good service standards. You must be appropriately priced for your client market and the services provided.

But from a client’s perspective these should all be basic expectations. No-one seeks advice from someone they think is incompetent or not suitably qualified.

So what are clients actually looking for

There is now a substantial body of research which shows that what clients really value most in their relationship with their adviser is just that – the relationship.

It is your ability to relate to your clients, to understand them, and therefore their circumstances, their dreams and their needs, that will determine the value your clients see in you.

These intangible soft skills are crucial to the quality of your client relationship and must be a core part of your value proposition.

There are many different types of clients – in terms of their financial situation, their lifestyle and attitudes, and their financial literacy. What they all have in common is the need for someone to understand them and provide advice and guidance they can trust.

What is financial wellbeing?

There has been quite a lot of research on the concept of a person’s wellbeing. A definition is a state characterised by health, happiness, and prosperity. There are a wide range of factors that contribute to wellbeing and are highly interconnected. For example it is hard to have good mental health if you have chronic pain, marital or financial stress.

So if we look at the where financial advice fits into people’s lives, it is not a discrete stand-alone need. It is part and parcel of their overall wellbeing.

In terms of their financial wellbeing studies show that clients receive the greatest value from the act of planning and achieving their financial goals over a long period of time. It is about feeling they having some control over their destiny – having a plan that addresses their changing life circumstances and the support and guidance on their journey.

Having a financial plan that addresses their changing circumstances gives people a sense of control of their financial affairs, it also helps to remove the uncertainty and worry which impacts on people’s wellbeing.

The complexity and fast pace of people's lives and the world they live in means good financial advice has never been more important for their future wellbeing.

The ageing population, pressure on government budgets and global political uncertainty mean people are having to take greater responsibility than ever. People’s lives have become more complicated. There are blended families, an increasing number of single person households, all sorts of intergenerational pressures – from ageing parents, to putting kids through school and getting a foot into the property market.

Clients understand it is a journey and as long as they feel they have a clear plan and you are guiding them on the way they will have a much stronger sense of financial wellbeing.

Delivering financial wellbeing

Helping your clients achieve financial wellbeing has many aspects and they must all work together seamlessly. It is no good clients trusting and valuing your advice if they can’t access it when they need it or trust in the service and execution of their plan.

It starts with the customer proposition – who do you wish to serve and how, what is it you are offering your clients? Everything else flows from this. How you deliver this proposition will determine how you set up your advice firm, the sort of systems and solutions you use.

Like any team, the client experience is always vulnerable to the weakest link.

If you are in the business of providing client-centred advice to help your clients achieve financial wellbeing, it is more than likely you are using or relying on the support of well-resourced, well intentioned partners – licensees, platform providers, technology firms.

They must be focused on delivering the support that you require to deliver client-focused advice and develop the sort of trusted long-term client relationship that leads to financial wellbeing. They must be committed to the delivery of advice and solutions that enable you to deliver great outcomes to your clients.

This comes down in many respects to whether your business partners share your values and client objectives or are they simply in the business of distributing product?

While delivering on all aspects of the plan advisers should never lose sight of the client’s financial wellbeing and the valuable role you play in that as their trusted adviser. It’s not just about the plan - it’s how they feel about their plan.

It’s about you being there for them, looking out for them, allowing them the level of involvement they wish to have. It’s about them feeling it is their plan, specifically designed for them and the advice you give is specifically to address their needs and goals.

Financial wellbeing is the future of financial advice.

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