Is it time for financial planners to reassess their value proposition?

The move to fee for service will force many advisers to reassess the value they offer clients, and to re-evaluate the needs of each individual, writes Ray Griffin.

It’s fair to say that a large part of the business diary of a typical financial planner is filled with meetings. While many will dread the onset of the ‘not another meeting’ syndrome, it remains a fact that meetings are integral to the conduct of a financial planning business.

The move to fee for service is going to see financial planners having to conduct many more client meetings than in the past, since meetings with clients are an integral part of ongoing service.

Meetings are central to the internal and external conduct of business and are a key part of the planning and decision-making processes. Knowing how to achieve good meeting outcomes is therefore a requisite skill for both financial planning business owners and practitioners.

Internally, business meetings encompass everything from the weekly practice/work in progress meeting to the annual strategic planning and review type meetings.

Externally, client meetings are the ‘bread and butter’ of a financial planning business and it is in this environment that, ultimately, the planner and the business will either succeed or fail.

However, success in client meetings is not necessarily a case of the client or indeed prospective clients agreeing with everything being proposed or recommended.

When I look back at my career I recall two such clients who almost always said something to the effect of: ‘Whatever you say is fine — we’re happy with your recommendations.’

Yet those two clients in time removed themselves from our client list during a period of economic and market uncertainty — clearly unhappy with the recommendations.

It seemed to me that by simply agreeing to whatever I recommended they acquiesced on their right to ask the hard questions during meetings.

By contrast a number of very long-term, loyal clients were quite forward in asking questions right from the time of the first meeting with them.

Questions along the lines of “Well I can get that on a term deposit at my bank — where’s the value in what you’re recommending?” are perfect opportunities for planners to extol the virtues of the advice itself and the ongoing services being provided by the firm.

Similarly, I recall a number of such clients who on first meeting I was inclined to think would not engage my firm as their financial planners.

While at times that ‘gut instinct’ proved to be true, on other occasions I was pleasantly surprised to witness these individuals went on to become happy clients who advocated our services to friends and family.

The conduct of meetings with clients can take many forms and some practitioners will embrace a formalised written agenda process and deploy military-like precision to work through each agenda item while, at the other end of the scale, some will have no such written agenda but will know what it is they are aiming to achieve in terms of meeting outcomes.

The conduct of client meetings is very much about personal ‘style’ and comfort for both the practitioner and client.

Experienced planners will readily identify the clients for whom a formalised written agenda would not work so well.

These people are clients who would simply be uncomfortable with such formality. By the same token, such planners will know that there are clients, perhaps from specific occupation categories, for whom a formal agenda meeting process would work very well.

Similarly, experienced planners will know how to gently lead all client meetings from the ‘meet and greet’ stage to the desired outcome at the end of the meeting.

An experienced planner can informally work to an agenda by casually going through an unwritten list, which leads clients through the key issues while checking in with the client at the start of the meeting for any additional discussion items.

Such an approach does two things. Firstly, it sets the items for discussion and in effect sets the meeting objectives; and secondly, it allows the client to add agenda items for discussion. From this point on in the meeting, experience counts greatly.

If the client offers additional agenda items, the planner needs to quickly assess whether the client agenda items should take precedence over the planner’s agenda.

This is a case of having a sense of how troubled or concerned the client is about the issues they raise. If the planner senses it is causing the client some distress, there really is no point sticking rigidly to the planner’s own agenda. It’s better to respond by addressing what is top of mind for the client first up.

This immediately gives the client comfort that issues of primary importance to her are going to take precedence and it also ensures that the planner’s own agenda items will have a better chance of being absorbed by the client.

To proceed with the planner’s agenda items as the priority simply sees the client’s attention distracted due to their concerns about other issues.

Not everyone has the natural skills to conduct meetings that are seen as successful by all parties, yet generally those skills can be acquired over time.

Even though newer planners can be struck by nervousness every time a client meeting draws near some meeting skills can be taught — or at least observed.

But really it’s mostly a matter of planners developing their own skills through repeated experiences.

One critical skill for meetings is to know how to ‘read’ what clients are saying through their body language. This is an observational skill, which requires the ability to interpret what is being said by body positioning — not what is emerging from the client’s vocal cords.

Knowing when clients are unhappy or uncertain through the way they sit, fold their arms, position their chair, hold their head, look to their partner (and so on) is a critical meeting skill.

Observing such behaviour allows the planner to try and discover what might be causing the problem for the client. It’s amazing what some clients won’t say when they are unhappy.

Note that the problem might be something totally unrelated to financial planning matters — it might just be that they have other life issues causing them concern.

Every meeting with clients is different simply because not all clients are the same and their issues are many and varied.

As the ‘chair’ of client meetings, financial planners need to know how to formulate a meeting agenda regardless of how formal or otherwise it needs to be and how to conduct it toward successful outcomes for all parties.

The principals of financial planning businesses should mentor their junior planners in these requisite skills as part of their ‘internship’. Knowing how to run meetings is not an optional extra.

For planners transitioning their businesses to fee for service, the regular review meetings they now need to conduct with clients is part of their so-called ‘value proposition’. Planners need to get this aspect of their client services perfected, or it will be hard to look their clients in the eye when they ask them to hand over the fees.

Ray Griffin is the principal of ConsultGriffin, and is a veteran financial planning observer.