A lifestyle choice for planners

What is lifestyle planning? Conceptually the idea is simple — it is used to help clients define how they want to spend the rest of their lives, cost this desired lifestyle, and then cash flow it to ensure that it can be achieved and then sustained, even through catastrophes.

The key is involving clients in the process so that they own the result. This requires planning with, and not for, clients and the process is therefore strategy rather than product focused. As a result of clients owning the process, recommendations are implemented on their behalf rather than plans and products being ‘sold’ to them.

Once the clients have been helped in defining their desired lifestyle (a systemised and extensive process in itself), planning moves to applying the threads of specialist advice to achieving and maintaining the specified goals.

It naturally follows that this style of planning lends itself to being fee-based. This is an important distinction, one where each member of staff becomes a profit centre, not a cost, and all time spent on a client returns income.

As such, lifestyle planning is the successful interplay of an adequately broad competency (the capacity), a conscious decision to provide lifestyle planning (the intent), a suitable system to deliver such comprehensive advice to a client (the means), and a suitable personality.

The capacity

In all cases of comprehensive planning, advisers require the capacity to deal with a broad range of issues.

With in-depth exploration of personal and business goals, conflict is common between family members, partners and their objectives. As such, not only diverse technical skills are required but good relationship and communication skills to manage and progress clients through the process smoothly.

Without an understanding of lifestyle issues it is difficult, if not impossible, to successfully merge the financial and lifestyle planning aspects for a client.

It is only by developing life perspective that lifestyle planners can communicate and lead the client through complete advice in a meaningful way without losing both themselves and the client in the detail.

This perspective is gained from experience and deliberate study of how life works, how the planner works as an individual, and how other people work.

Many have a defined and written personal development path, developed and reviewed with the assistance of either a personal life coach or another like-minded planner.

The intent

Providing lifestyle planning is not the result of accident or a gradually expanded service, rather it is a deliberate move where the very “concept of linking financial and lifestyle planning must be a ‘core belief and activity’ in ‘what we do here’,” says Paul Etheridge, a UK-based financial planner.

Lifestyle planning is about being “totally comfortable to put lifestyle focus at the centre of data collecting and client questioning and in doing so, position oneself as a client’s financial architect — not necessarily the builder”, adds Financial Clarity’s Ken Bloomfield.

The means

Process is an important factor in the structuring of the client/planner relationship. It is the means by which the lifestyle planner can naturally and systematically ask their clients supplementary questions.

These questions will extract from the client their real underlying and driving motivations, which are fundamental to accurate and meaningful goal setting. Through this, the planner develops the relationship by understanding, at an increasingly deep level, the aspirations of the client. It allows the client to begin to express their desired lifestyle and share their real fears, hopes, difficulties, weaknesses and strengths.

Without a structured and clearly defined methodology for delivering lifestyle planning, even the most experienced planner will battle to remember everything that needs to be covered and, most importantly, will lose the client’s attention by failing to provide a structure that the client can follow and relate to.

It is in this process of getting to know clients at a deeper level that the shift occurs away from ‘selling things’ to ‘talking to people and finding out what they want’. Lifestyle planning is typified by a move to the latter.

Complex systems require adequate software to support them. As lifestyle planning in Australia is relatively new, software that is based on this style of planning is not common, even with the recent emergence of several new options.

Lifestyle planning software needs to support not just the planning aspects of detailed data collection, modelling and plan production with a client, but also cope well with the administration aspects of notional accounts, workflow management and customer relationship management (CRM).

The success or failure of any business is down to how well it can define the best way of doing what it does and doing it that way, consistently. In the business of lifestyle planning this is, if anything, even more important. There needs to be a clear structure.

When a lifestyle planning service is centred on strategy rather than product, planners are able to be more creative with solutions for clients.

However, it is widely believed that this adds a layer of compliance worry that dealers would prefer to avoid for safe offerings.

This is one of the greatest misunderstandings of our time, however, as planners by necessity need to be more systemised to deliver lifestyle planning. In doing so they naturally adopt processes that ensure they are more compliant than a practice that operates on a more ad hoc basis.

Who offers it?

Lifestyle planners typically have a passion for life and are very aware of balancing their own work, family and leisure time. Most have defined their own priorities and the steps by which they will be achieved. As Alf Priestly of Strategic Lifestyle Planning says: “Helping others achieve goals and dreams includes being able to inject passion into their lives while demonstrating it in your own.”

As a result of the capacity requirements, many planners moving into this kind of planning style find they need to upgrade their skills set.

Little surprise then that advisers who move into lifestyle linked financial planning tend to be the top planners in their dealer groups, or already have their own dealer licence.

Well recognised examples of this are Peter Nicholson of Peak Financial Planning (Count), Darren Laudenbach of Milestone Financial Services (AMP), Peter Roan of Roan Financial (Securitor), Kylie McIntosh of Ulton Group Bundaberg (PIS), David Haintz of Haintz Financial Services, and David Carney of Aspect.

These planners have dared to be different and are reaping the rewards that come with it.

What are the benefits?

Advantages include the single easiest means of differentiating a financial planning service. Further, it offers the means to really involve and engage clients and thereby negate any need to ‘sell’ to them.

This style of financial planning gives clients a far clearer understanding of where they are and where they are going and in doing so fosters greater client loyalty.

It provides a tangible and legitimate reason for ongoing service and annual reviews and thereby delivers more to clients while earning more for advisers.

Typically, the use of lifestyle systems and client engagement tools can dramatically aid compliance.

In the words of one lifestyle planner, this is the burned sausage principle: “No one complains about burned sausages, if they helped cook them.”

Ian Hutchinson of Life by Design adds: “Clients don’t want financial planning; they want what financial planning gives them and that’s a better lifestyle. The problem is that most people know what they don’t want; fewer know what they really do want.

“Lifestyle planning is about clarifying what clients really do want so that can be articulated in a financial plan.”

Aspect Partners David Carney adds: “Once planners are offering this form of service, they frequently wonder why it took them so long to do so. Clients love it, and advisers can charge more while feeling more satisfied.”

The benefits are so clear to those who have chosen this path, but like clients, it is not until one has experienced a service that one can truly appreciate its advantages. This is a style of planning that offers both advisers and clients a better way of life.

Guy Thornycroft is marketing manager at Prestwood Australia .