Lining up clients’ financial choices with their goals
The concept of ‘values-based financial planning' fits in perfectly with spirit of the Future of Financial Advice (FOFA) reforms, according to American financial planning coach Bill Bachrach.
Bachrach, who will be in Australia speaking at a BT event in March, created the concept 25 years ago so that "planners could help their clients align their financial choices with their most important goals and their most deeply held values".
"It isn't values-based because it's ethical or honest or because the people who implement it have more integrity — although we hope those things are true," said Bachrach.
Instead, it is simply about getting a client's financial decisions to line up with their goals, he said.
An important by-product of the process is a very high level of trust between the planner and their clients, Bachrach added.
"We've had a following of planners from Australia since the mid-1990s, and values-based financial planning has become more popular since the new FOFA reforms have been proposed," Bachrach said.
"If clients are going to pay the adviser a direct fee for their service and advice, the process — and the value of the process — has to be very obvious," he said.
Planners should also ensure they have a relatively small client base of ‘ideal clients', Bachrach said.
"An ideal client is simply a combination of two criteria: money and personality," he said.
"A client has to pay the planner enough money to be profitable for the business, and also to be enjoyable for the planner to do business with," Bachrach said.
There is no point being hired by a client who treats you like a ‘servant' or a ‘salesman'; turns up late for meetings; or turns up to meetings completely unprepared, Bachrach said.
"It's also frustrating when you're giving someone advice and they're not following it," he said.
Bachrach was also keen to make the distinction between financial planners and salespeople.
"When your clients trust you, sales techniques are not necessary. What's necessary is that they hire you and refer you to their friends, family and colleagues," he said.
"They'll do this because they trust you and you're good at what you do — not because you're a good salesperson," Bachrach added.
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