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Are you telling
 your clients the truth?

If you want to keep clients, keep getting well paid, and to feel great about the work you do, says lifestyle financial planning coach Paul Armson, then you have to tell clients the truth about money.

In 1989 my Mum died suddenly at the age of 59. That wasn’t quite in my Dad’s plan. He’d spent his life working hard, working too many hours, never spending much time at home, always working, working, working – all for a future that sadly never quite materialised. Today, 25 years later, he still misses my Mum. He’s always saying: “If only…”

When my Mum died, that’s when I woke up to the fact
that life is not a rehearsal; that precious time is slipping away. And that’s when the penny dropped for me, about my job and what we can really do for clients. I suddenly realised that it’s my responsibility to tell clients what I started to call the Truth about Money (see webinar opposite). And I believe, if you’re a financial adviser/ financial planner – if you’re worth your salt – then it’s your responsibility too.

Telling clients the Truth About Money should be every adviser’s focus.

Sadly, however, it’s not. They fail to answer the big questions. Instead products, investments, pensions, ISAs – the boring money stuff – becomes the focus. Charges, total expense ratios, asset allocation, performance, comparisons, suitability reports, valuations, reviews – that’s where most advisers spend their time.

And it’s not surprising. The financial press does its bit
to keep advisers focused on products and investments for one simple reason: so it can keep advertising that stuff at you and keep raking in the advertising revenue. They don’t want you to tell clients the truth! They want you to keep focusing on the money!

Even the Regulator plays its part in leading advisers astray. Because the Regulator regulates the distribution of retail financial products, they unwittingly encourage advisers to focus on the wrong things.

I’m not suggesting that the product related stuff mentioned above isn’t important. It is.
But it’s not that important. Not compared to answering the big questions and identifying and helping your clients get what they want out of life, before it’s too late.

Avoiding the big questions
Want some proof of how advisers fail to tell the truth about money?

I’ve seen advisers spend hours and hours – days even
– putting together a suitability report for an investment based primarily on a clients’ attitude to risk. And they’d claim they were doing a good job! But all the time they’d fail to identify what that client’s financial future really looked like; where they were heading financially; whether they could afford to maintain their lifestyle, or whether they were going to run out of money, or die with too much! They hadn’t asked, or answered, the big questions. They hadn’t told the Truth About Money.

I’ve seen advisers fret over which £100 per month pension to recommend to a business owner client, based on their supposed affordability, all the time failing to tell that client that in order to keep living anything like the life they’ve got they need to be putting £3,000 per month away! They failed to tell the Truth About Money.

I’ve been in competition
with two other advisers, both recommending that a client invest their hard earned wealth resulting from the sale of their business into an above average risk portfolio – because that’s what the client’s risk profile identified.

But that’s not the Truth About Money. Instead, I pointed out to the client that they didn’t need to take any risk; they needed prudence, not performance. They needed just 0.25% real rate of return to ensure they could live a great life and never run out of money. I pointed out to the client that a risk profile
is the maximum amount of risk you’re prepared to take, not the risk you should take. (Guess who got the million pounds plus investment and referrals galore.)

Sadly, because of too much product focus, there are just too many advisers recommending investments by effectively sticking pins in clients in order to identify their pain threshold (how much risk they can take) – and then going back to them and recommending a portfolio that should always give those clients that amount of pain!

That’s why millions of people all over the country might just have their money invested in all the wrong places – all thanks
to risk profiling. (Now there’s an opportunity just waiting for you – if you’re prepared to think differently!)

What’s right for the client?
I’ve seen advisers happily take this year’s ISA investment
off a new client, only to fail
to identify that the client is working in a job he hates, when he could in fact retire immediately and live happily ever after without ever running out of money. Sadly, I’ve seen this happen when three years later that client – still stressed and working in a job he hated – found out he had just six months to live.

Result: three years of his life lost, spent working in a job
he hated when he could have been playing! That client could have easily afforded to retire five years earlier. He could have been spending precious time with his wife and family, enjoying what turned out to
be only a short amount of time they had left together. But it’s too late. Their adviser was well- qualified, well meaning and probably a nice guy – but he hadn’t done the job properly. He’d focused on the wrong things. He sorted out the ISA but he hadn’t told the Truth About Money.

And here’s the funny thing. The adviser had only earned a fraction of what he could have earned if only he’d known a better way of doing things. Question: Using the above client as an example, what value would you place on:

1) Arranging an ISA? (Traditional financial advice)

2) Freeing a client from a job they hate and enabling them
to have the peace of mind and security that they can enjoy the rest of their lives without fear of ever running out of money, whatever happens? (Lifestyle Financial Planning)

The best fund, the best asset allocation, the cheapest product, won’t change a client’s life. The Truth About Money will. Showing clients where they are heading financially, answering their big questions – like How Much Is Enough? – this is the stuff that clients want – and they’ll pay you good money for it!

Service worth paying for
When you choose to tell clients the Truth About Money and deliver Lifestyle Financial Planning there will always be a little bit more work. But that is what is needed to show clients what their financial future really looks like. That’s when clients take action, that’s when they engage with you and your service. Clients absolutely love it and because of this they will agree to you being well paid – every year.

The simple fact is this: clients won’t value financial planning until they experience it. It’s our job to help them experience it. Then they’ll get it. Then they’ll truly see the value that you can add – not in getting the cheapest products, or
best performing funds – but in helping them to live a great life with the financial clarity and peace of mind they deserve. Now that’s a service proposition that’s worth paying for!

A product focused service worked in the past – in a world of commission, in a world of smoke and mirrors – but not any more. In return for their fees, clients will demand real benefits and a great client experience. As RDR starts to bite, more clients are starting to learn they can simply turn off an adviser’s fees if they’re not happy with the service. This will become more common.

For this reason, I urge every adviser – now more than ever – if you want to keep clients, if you want to keep getting well paid
– more importantly, if you want to feel great about the work
you do – then take the focus off products and investments and instead start telling your clients the real truth about money. They’ll love you for it. Don’t worry about the products and investments. Just focus on your clients and on helping them get what they want. Then they’ll happily give you all their money so you do much more business and easily justify bigger and better fees.

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