Goodbye, planner... hello, financial concierge

It's time to stop criticising the industry and use that energy more productively by moving to a tech-enabled, consistent, and client-engaged process that allows client-centric advice to thrive, write Indy Singh and Philippa Yelland.

Until very recently, St Elijah's monastery in Iraq had survived all that nature and men had thrown at it.

But, early this year, news reports said that jihadists had pulverised the 1,400-year-old sanctuary and chapel.

This destruction shows how easy it is to tear something down and how hard it is to build. So, this prompts me to ask you: are you tired of reading critical articles written by people who earn a living from our financial planning industry?

The criticisms vary — that we are not a profession, we sell only product for fund managers, that we do not care for the client and that there need to be laws to make us honest.

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I sometimes wonder if these people are sharing their own guilt, because the people I meet and who seriously practise financial planning care for one thing only — to take their clients' personal and financial lives to a higher level of security and well-being.

We have no magic

I dislike the term 'wealth management'. It has connotations of us having the magic to create wealth for a client beyond what is ordinarily achievable, and so it is a misnomer.

‘Wealth management' may be the phrase that attracts a new client, but we have no magic and we could fail to answer the question ‘If you know it all, then why aren't you getting rich yourself?'

We need to be clear on this: we are financial advisers or planners (whatever you may call yourself) who can give direction and discipline to people to organise and manage their finances and indeed their lives too.

Therefore, we can help them enjoy a better quality and better standard of life, particularly when they are retired and/or unable to gain full-time employment.

We do so with the benefit of our education, training, and, importantly, work experience since there is much that we do for clients that is intangible — confidence, reassurance, hope, financial education, and guidance through life's stumbling blocks.

So, what is the solution?

Under-promise and over-deliver. Disclose, disclose and disclose.

Educate the clients on financial market performance and behaviour. Don't be afraid to tell them that asset values can decline, even if on paper.

Understand the client's psychology and ability to take on risk. Understand the client's needs and cashflow requirements. Within risk-reward expectations, develop a strategy that can withstand external shocks. Use technology and pictures.

Remember that financial planning is much, much more than investments, risk insurance or tax planning. Estate planning, health management, parent support, debt reduction, children's education, family bonding, handicapped children, family and testamentary trusts, retirement planning, lifestyle planning, and guidance when life issues come to the fore are but a few. Investments are usually the last cab off the rank.

Financial planning should be holistic and not half-baked with limited advice and limited client information, as some of the banks and industry funds may provide to retain customers. It should encompass current and future financial management for the family: grandparents, parents and children inclusive.

Successful financial planners have invariably provided pro bono assistance along their careers and in a majority of cases benefitted from it eventually. It is a journey that brings gratification from helping people, which does not necessarily come with a short-term focus.

New era of engagement

This brings me to life management — financial advice that truly gives our clients what they deeply want.

Note, we say clients where there is a special relationship of trust and advice that customers in a grocery store do not receive. Hopefully, Australian businesses have developed a truly consistent, tech-enabled and client-engaged process that allows client-centric advice to thrive.

The new-look financial planner for the 21^st century is the financial concierge, evolving from the old model of calculated trust based on figures, to a relationship of trust based on clients' perceptions of the people who are helping them with their money.

For younger generations especially, financial life management will be important, because it helps them overcome their biggest fear — of being unsuccessful financially and in everyday life in a fast-changing and highly competitive world.

This is where the concept of financial concierge could come in — this kind of planner who without being a psychologist, possesses the skills to focus on the individual's life goals and takes their entire life into account.

Such skills are important since the financial concierge needs to attract and retain the attention span of those who may trust an App on their mobile phone more than people with real-life experience and, be remunerated for their services as well.

With the benefit also of behavioural economics, the financial concierge expands beyond the traditional areas of investing, saving or building additional wealth, and also offers advice on how to best spend money and save in a way that is in line with someone's life goals and ideals.

Financial planning and life management is more about maximising people's lives than maximising net worth while dealing with a spectrum of client types.

Clients may be:

1) Traditionals born before 1946 who respect authority;

2) Baby Boomers (born 1946 to 1964) sandwiched between ageing parents and anxious children;

3) Gen X (1965 to 1979) who are sceptical of financial planners but may need advice as they move into personal relationships or out of them;

4) Millennials (1980 to 1995) who are cyber-literate and may prefer informal interaction to start with; and

5) Gen Z (1996 to present) and transitioning to take responsibility for themselves as adults with all the stresses that it brings.

Perhaps the greatest challenge will be Gen Z adults: those born after 1996 and coming to maturity in a virtual world where everything is done uber-fast and online.

This is a future where the financial concierge can come to the fore — financial planning and life management is not about investing money in first place, it is about helping people across the spectrum of age groups.

Indy Singh is the founder and managing director of Fiducian Group Limited, and Philippa Yelland is head of communications and marketing.