Financial Planners must look at the bigger picture

Uncategorised 14 March 2019

Regardless of a client’s personal circumstances, they are likely to have concerns about their financial future.  As such, when clients seek financial advice for the first time, often their primary focus is on receiving guidance on how to invest money wisely, ensuring they get good returns for years to come.

While investment returns are important, one of the main roles of a Financial Planner is to enhance their client’s long-term financial wellbeing. Focusing primarily on investment strategy gives clients an immediate reassurance ‘hit’ but does not significantly add to long-term financial wellbeing.

Financial wellbeing isn’t about being well off, it’s about having confidence that you can live the life you want to, even if things don’t go as planned along the way. Therefore, it’s important that planners and clients take a step back and look at the bigger picture without being tempted to make false assumptions or to look at planning requirements in isolation.

Financial Planners need to adopt a holistic approach that ensures clients come away from meetings with a clear view of their life goals and how best to achieve them, taking into account the level of risk they are willing to take. For clients to fully buy into this type of advice process it must be interactive, enabling them to understand the value of taking one course of action over another.

Financial Planners and clients should ideally be jointly reviewing a projected life plan alongside potential ‘what-if’ scenarios that can be edited in an instant. The ability to input into a range of different scenarios to see how this affects their financial future means that clients become more emotionally involved in the process and place greater value on the outputs.

There are also significant benefits to the Financial Planner. Firstly, the client sees real value in the service, as well as monetary savings as a result of the planning, which is often tax related. Secondly, if clients have financial wellbeing, they will be happier. This ensures that fees and poor growth rates in bad times become secondary concerns.

To sum up, those giving advice should be viewed as lifetime planners, focused on promoting long-term financial wellbeing. By avoiding the temptation to concentrate on short-term gains or losses, planners can seize the opportunity to make sure clients are on the right path to live better for longer.

i4C provides financial planners with a feature-rich, but easy to use web-based application, enabling the creation of simple or complex cashflow modelling to provide clear and compliant guidance to clients.

By Mark Harman, CEO, i4C Technology

This article was published here in Financial Planning Today.