Kinder: Where I disagree with Brett Davidson and other consultants
Life planning guru George Kinder takes issue with advice being given by consultants in the advisory space
George Kinder, life planning guru and founder of the Kinder Institute of Life Planning, is taking issue with a fundamental piece of advice being given by business consultants in the financial advice market, advice he terms “the principle of 80:20”.
“Something that has become very popular within the financial planning culture and which is being advocated by Brett Davidson and others, and with which I have some disagreement, is the principle of 80/20, which is that we let go of the 80% of clients who are not serving us well from a profits point of view and go after just the 20% that are serving us well,” Kinder says.
Kinder adds, “Brett and I are good friends and I have immense respect for him in what he does,” and he admits that he is “being contrarian with market thinking”, but at the same time he believes there are business opportunities to deliver life planning into the disintermediated (80%) market, online and face-to-face, as well as on an altruistic level to people who are unable to afford ongoing financial planning but would benefit from undertaking a financial life plan.
Kinder says: “It’s our belief that this 80/20 principle breaks society apart. But also, by turning away clients, planners are missing a huge opportunity. There’s around £500bn that has been abandoned by the banks in their disintermediation of the bank assurance market, the middle market as we call it in America, so this is a huge market to simply ignore.”
It’s how you do business
Advisers have come to realise, Kinder says, that RDR is “not about how you charge for your services, it’s more fundamental than that, it’s about how you do business”.
With the creation of so many disintermediated clients, it is inevitable that automated advisory systems and services will enter the market, he says, “what we in the US call robo-advisers… but there is something that doesn’t work with that and won’t work with that; people need to connect with other people around money.
“For many people money is a scary area, it’s an area that has a lot of anxiety attached to it and I think people would much rather hear from, connect with and relate to a human being who is trustworthy and proves they are trustworthy by the models that they use, than attempt to deal with our own finances online.”
Based on these principles, Kinder has established LifeSpire, a life planning company, which is recruiting like-minded life planners to become part of the drive to expand the influence of financial life planning around the country. LifeSpire will provide financial life planning for those able to afford it but it will also require participants to agree to a minimum commitment of at least 10% of their business time “to deliver free hour-long life plans to whoever wants and needs them,” Kinder explains. “We’ve got a spectrum that we deliver that includes the whole market.”
Kinder emphasises, “It’s not a free hour of life planning, it’s a free hour-long life plan. The notion is that everyone deserves to be life planned. Life planning identifies what inspires you about your life and helps put the financial architecture together.”
Accordingly, all clients, whether fee paying or ‘pro-bono’ complete a pro-forma questionnaire, based on a number of goal exercises designed by Kinder to extract from people what is really important to them in their lives.
“At the Kinder Institute we train financial planners to deliver life planning in an hour using a system we call the EVOKE five step process. So we will train advisers at LifeSpire to notice and pick up on what are the most likely and most inspirational elements of a person’s worksheets as they come into the meeting. That way they can get right down to what is important in that person’s life,” Kinder says.
He believes that creating a scalable nationwide company, a network of financial life planners, has the potential to see the practice of life planning grow substantially in the UK, as well as helping people to see their finances from a different perspective. “We want to be creating an extraordinary buzz in all segments of society that life planning is a process really worth doing and really worth having,” Kinder says.
He admits that life planning at present is “a cottage industry”. His idea is to bring like-minded people and firms together and then grow it. “If you want this to happen in a hurry, and I do, the way to make it happen is to aggregate or consolidate a number of firms who are in the cottage industry, who are doing life planning already and doing it very, very well. You help strengthen their processes and then raise the big funds to roll it out in an institutional way,” he says.
“I think one of the best definitions of life planning is that’s its financial planning done right. It’s where you model integrity and deliver freedom. Hence, the LifeSpire strapline: Honest Inspirational Financial.”
BRETT DAVIDSON RESPONDS:
“I stand by my views on segmentation and working with profitable clients. To help others you have to be in good shape yourself. Like they say in the safety briefings on commercial airlines, “fit your own oxygen mask first.” When you have a thriving and stable business you can help your local community and society at large in a variety of ways.
“I’ve also suggested in my segmentation work that firms may choose to consider some clients as pro bono work, like in the legal profession. That approach doesn’t seem too far away from what George is suggesting in terms of time commitment in this project.
“As George says, he and I are good friends and have spoken over a coffee many times about the issues we really care about in Financial Planning. One of his most experienced Life Planning graduates acts as my personal Financial Planner and every consulting client I work with I recommend to check out George’s Life Planning course if they want to improve the way they interact with their clients.
“I understand where George is coming from with LifeSpire and I wish him and everyone involved with it all the best.”