Yesterday, Planning was the future of financial advice. Today it is the benchmark for the best firms.
Tomorrow it will not be enough. Here’s why.
The days are numbered that firms can sit on a pile of assets, get paid 1% and send out a newsletter once in a while. It might last a while longer, but those clients will soon be realising that they are not getting much for their money. Giving ‘Advice’ on products has not been enough for a while and it’s just a question of time before it is general knowledge.
‘Planning’ has been the future for some time now. Creating a path to clear objectives. Using a cashflow tool to put numbers on that path. Planning before product (but not instead of).
This is a powerful process and many firms have seen the stronger client relationships (and income) that develop when you really focus your attention on helping clients to achieve objectives.
There is, however, a problem. The robots are coming to get us. Automated investment portfolios are here and targeting those who only get Advice. But that’s ok, we give Planning first, we add value with our cashflow forecasts.
Well, Planning is coming under fire too.
Cash management apps such as OnTrees or Money Dashboard look into your bank accounts and organise your spending into categories. They help people manage their cashflows and set savings targets. They are, in fact, remarkably similar to the spreadsheet that we ask clients to fill in so that we can set up their cashflow forecast.
It’s going to be a pretty small leap to an app that takes this cash management output and feeds it directly into the cashflow forecast. Tick a couple of boxes, set a few objectives, and the software will go into your bank, and your automated investment portfolio, and produces a summary of spending and a long term cashflow. Update your house price each year, perhaps your pension too (an automated link to the State Pension forecast shouldn’t be difficult) and you get an update on progress.
With a piece of kit like that, who will need a financial planner, let alone a financial adviser?
The answer, I believe, lies in putting ‘Coaching’ before ‘Planning’ before ‘Advice’. CPA.
Coaching involves helping clients to understand themselves better, to discover new goals and objectives. Dare clients to dream a little and help them work out their desired future. Then use the cashflow tools to show if it is possible, provide the investment, tax and pensions advice, and then regular reviews to track progress and update dreams. Putting coaching first puts a value on the whole process.
Creating a financial planning towards a future they didn’t know was possible will not only create loyal clients, it will create ambassadors.
You might be tempted to say ‘Oh, he would say that because he’s trying to sell his coaching course’. Actually, that’s the wrong way round. I set up this coaching course because I think advisers using coaching skills is essential. And because I fear that I may have foreseen the death of financial planning.
(And anyway, it’s not my course. It’s run by Quiver Management).