Six Easy Steps to Turn Good Advice into Great Advice

May 7, 2014 Steps to success

Only 3% of planners provide “good” advice. This is a startling statement but one independently backed by the ASIC Shadow Shopping Study report released in March 2012.

Before we all ruffle our feathers and argue over the definition of ‘good’ financial advice, I’ve summarised the notes from this report to help you turn your ‘good’ advice into great advice.

  1. Good quality advice meets the client’s needs, as well as satisfying the requirements of the law: As a qualified adviser I assume you understand the requirements of the law so let’s focus on “meeting the clients’ needs”. To ensure your advice truly meets the needs of a client you first need to ask your’ client to define those needs but that’s not as easy as it sounds. So the first step is to create a series of questions focussing on three core elements:
    1. a. Self-assessment: create a series of thought provoking questions that encourage your client to do their own ‘financial health check’.
    2. b. Who are they: what do you want to achieve most? Who are they as a person? You need to know your client before you can provide great advice.
    3. c. What’s changed: have your clients’ circumstances or goals shifted since your last review?
  2. Good quality advice refines and clarifies a client‘s objectives, and helps the client, as much as possible, to achieve those objectives: I’ve discussed the meeting process with hundreds of advisers over the last three years and what I’ve found is that most planners begin a meeting with little or no understanding of their clients’ objectives and priorities. Consequently many advisers manage this aspect of the meeting “on the fly” and often at a very superficial level, often missing crucial information and opportunities. To ensure your advice is great advice, provide the clients with your questionnaire prior to the meeting. This ensures that all aspects of advice are covered and allows the client to self determine objectives and priorities. These can then be explored in more detail during the meeting.
  3. Good quality advice can be comprehensive or limited in scope, depending on the client‘s needs and circumstances: To do this effectively also requires a clearly articulated description of what financial planning entails and subsequently what services your practice offers. Overtime, I’ve asked hundreds of advisers, ‘how do you explain financial advice?’ and to no surprise I’ve heard hundreds of different responses of varying complexity. So if advisers find it difficult to articulate their advice, how is the client supposed to understand it and then provide clear direction on what is in and out of scope? Building on the structured questionnaires in the previous steps, one of the outcomes should be that the client can identify their own priorities and self determine their advice scope.
  4. Good quality advice educates and equips clients to make informed decisions about their finances, including whether to accept and implement the strategies and products recommended to them: So what actually goes on in these client meetings when it comes to discussing and explaining strategies?Most of our clients are not financially savvy however they still want to make informed decisions regardless of the complexity of the strategy. This then becomes the challenge for financial planners and will set apart the good and great from the rest. We’ve asked the question and it seems to come down to a combination of the following:
    1. a. Verbal explanations: Whiteboard & Pen
    2. b. Various free online tools: Home-made excel spreadsheet tools
    3. c. SOA modelling software
  5. Sound strategic advice is a key component of good quality advice. Product recommendations should follow, rather than direct, the suggested strategies: This is such a no-brainer that I’m surprised it even rates a mention but apparently there are still advisers that see themselves as product flogging, revenue generating, sales people. The client meeting needs to be a journey of identifying, comparing, discarding and choosing various strategies that the client understands and feels comfortable implementing. The challenge for an adviser is how to effectively and efficiently do this with the client. The simple answer is you will need a great set of tools and a structured repeatable process.
  6. Good quality advice involves good communication—including SOAs and verbal communication: SOA’s are of course a necessary part of the advice process but will rarely be what clients base their decision. Good communication will not just be limited to verbal communications but involve the whole spectrum of technology based communications tools along with the low tech whiteboard and pen.

Financial planning tools have been designed to bring together this suite of tools in one place; online data gathering questionnaires, client education tools such as video presentations, online modelling calculators providing visual explanations and real time comparison of strategies. These are the tools of the modern day financial planner who wants to give “great” financial advice.

Hans Egger is Co-founder and managing director of AstuteWheel Client Engager, Financial Planning Software and Estate Planning Software and admin of The Modern Adviser

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