Becoming a planning-centric financial planner is going to cost you time, money & effort - but it’s worth it!
by Amyr Rocha Lima, CFP®
I want to take you back to 1969.
By all accounts 1969 was a heck of a year. In that year, humanity saw the first moon landing, and event which influenced the scientific community for many generations, the peaceful gathering of NextGen folk at Woodstock, an event which shaped culture and music for many generations, and… the birth of the financial planning profession.
According to the authors of The History of Financial Planning, there was a meeting that happened on December 12, 1969, where thirteen men gathered at the O’Hare Hilton Hotel in Chicago and declared the task of covering multiple personal financial issues – and how those issues interacted with each other – to be a unique service and more a effective way to help clients make sound financial decisions.
The next 51 years have of course seen an evolution of that basic idea and a technological revolution that has changed how the public interacts with its personal finances.
Here in the UK, we saw financial advice start out very much as a commission-centric movement. In time, however, this approach gave way to client-agreed remuneration – albeit still maintaining very much a product-centric approach.
And, whilst right now a product-centric approach might still be the dominant force, I’d like to propose to you that the future is here, and it’s pretty clear that a planning-centric approach is gaining more strength in our profession.
This gives us, the next generation of financial planners, the biggest opportunity in the history of financial planning to become real leaders in our profession and to drive home the message of the good we do.
Now, it’s important to clarify that, if you decide to focus on developing and leading a planning-centric career, it will not all will be a bed of roses. I can tell you that from experience, as I myself have moved from a product-centric role in provider land to becoming a planning-centric financial planner.
In fact, there are at least two implications that I think you need to consider:
First, you are going to forego some short-term earnings because the math is simple: you can sell more products to people in the same amount of time that you can build financial plans for people.
Second, becoming a planning-centric financial planner is going to cost you time, money & effort.
A lot of the technical aspects of financial advice and investment management are being commoditised by algorithms, which can do these tasks quicker, cheaper and more consistently that any human can. And whilst there might be a rise in so called “robo-advise” and automated solutions, it’s in our power to up-skill ourselves in the human side of our profession, learning how to better listen to our clients and learning how to be more empathetic, so that we can demonstrate to our clients what real financial planning is and why we create social value in a way that an algorithm never could.
So why would anyone want to do this? Why would you voluntarily leave money behind and also pursue a career path that is going to cost you more time, money and effort?
Well, because it’s a better value proposition and because it’s a better life.
This is what thought-leaders in the global financial planning community are calling the “new alpha”.
What is it that we tell people about ourselves?
On one level, of course, we tell them that we are financial planners rather than fortune-tellers. That is, we make clear that we don’t deal in economic forecasting, market timing and performance chasing, not just because they are impossible but because they are largely irrelevant: they have nothing to do with whether a client family does or doesn’t achieve their goals.
Being planning-centric empowers us to present our capabilities to our clients in terms of three priceless gifts, any one of which is worth in the long run multiples of what we charge, and which together virtually always enable us to get our clients where they would like to get to in their lives. Those gifts are, of course: financial planning, having a long-term historical perspective, and maintaining an ongoing defence against making big mistakes.
Remember, our goal is not to try to be “right” as an end in itself. Our goal should to be to try to be the friend and the professional who is often the last source of realistic long-term optimism in our client’s lives.
Now, for many years I made the mistake of thinking that our profession was primarily about money. I made the mistake of thinking that it was more important for me to talk to clients about my solutions rather than to ask questions and really listen to my client’s answers. But then, I started implementing these changes, I started living this “new alpha”.
So, what is it like? Was is living this “new alpha” all about?
Well, it’s about the benefit that becoming a planning-centric professional will have on your career and, much more to the point, on your soul.
It’s about Jackie & Dave, and knowing that the work we can do for them will protect their family in the event of an early death or the diagnosis of a critical illness.
It’s about Sophie & Denise, and knowing that the work we can do for them can secure them a retirement full of dignity and independence.
And it’s about Rita & John, and knowing that the work we can do for them will enable them to leave a meaningful legacy to their family and to the charitable institutions they care deeply about.
The bottom line is this: a financial plan that’s unsinkable unless it hits an iceberg isn’t really unsinkable. And it isn’t really a financial plan. It’s more in the nature of a bet, and prudent people don’t bet on the financial fate of their families.
We are the professionals that can cover the myriad of personal financial issues – and how those issues interact with each other – in order to be of unique service to our clients and our community.
So let’s be that professional.
Amyr Rocha Lima, CFP® is a partner at Holland Hahn & Wills LLP, a financial planning practice based in Kingston upon Thames. He specialises in working with successful professionals age 50+ helping them reduce taxes, invest smarter and retire on their terms.