In recent years the trend for financial advisers has focused more on helping clients achieve their goals and less on investment returns. We’ve even had a change of job title from financial adviser to financial planner.
But is this what all clients really want?
A Morningstar client survey shows that clients still rank “maximising returns” as one of the main reasons they work with a financial adviser.
I completely agree that spending time really listening to a client’s objectives, challenging them on what’s important in their lives and showing them what’s possible is the art of true financial advice. However, it’s investment returns that will deliver the lifestyle the clients want.
One the hardest things about marketing the lifestyle planning side of financial advice is that it is so intangible. When starting an adviser/client relationship a client won’t be able to see and touch what they are getting.
Client’s will understand if they are getting a better return on their money by working with you.
However, delivering a return for a client doesn’t just mean a better investment return. It could also include:
- A reduction in the taxes they pay
- Lowering their costs to invest
- Delivering better service
These are all tangible things the client can see and use to determine adviser value.
When it comes to investment returns we all know it is impossible to time the market and that most active strategies tend to underperform the market as a whole.
But we do still have some influence on investment returns. That is why it’s so important that you have robust due diligence procedures in place to analyse the investment solutions you are offering. You must also keep your technical knowledge up to date and keep an eye on investment costs.
Failure to do these things could result in poorer investment returns.
As I said earlier, nothing beats the lifestyle element of financial planning for a client.
Showing a client they can retire now rather than stay in a job they hate is so rewarding. We must do more to promote this element of our work as potential clients are still not familiar with this part of our service. But we must remember that returns are still essential in delivering the plans we create.
Carl Roberts is a Managing Director and Chartered Financial Planner at RTS Financial Planning. Read his full profile here.
The views expressed in this article are that of this author and do not necessarily reflect the views and opinions of Voyant.
