I was reading A Certainty Advice Group White Paper this morning titled “What price valuable advice?” and quote from that paper: “a valuable adviser first seeks to find out the very root cause of why people seek out financial advice.”
Often this is about understanding what consumers fear, and most new clients will not tell you they are afraid because they believe this will make them appear weak. As an adviser it is my responsibility to come to an understanding of what a client fears and, because of that fear, what they need by way of advice and support. This support is often to provide some education so that they have a better understanding.
Sadly, I have several case studies I could draw from to illustrate this, but the following couple’s dilemma pinpoints why we need to understand the concerns a new client has when they meet with us for the first time.
Bob and Marion (an older retired couple) sat in front of me for the first time: the way they sat at my table portrayed their stress. Initially they stated that they just wanted some advice on investing a small sum remaining as a result of downsizing. They had recently sold their beautiful home and garden and had purchased a more modest home on a smaller block of land, the net proceeds being all they have to invest for the future.
As I sought to understand their personal journey and where the money came from to build the home recently sold, Bob told their story. Several years ago, they had sold a business they had built up over many years of hard work, and with the proceeds had set aside a sum to purchase their dream rural property. They had invested the remaining capital in a superannuation fund to fund their retirement years. They felt successful and proud of their achievements.
At last the next stage of their life’s journey had begun. They designed and planted a beautiful garden, they travelled and enjoyed small hobbies. Then the GFC came along: they did not understand how their money was invested, having left it to others to decide how best to place their capital. This part of Bob’s story was hard to listen to: he was ashamed that he had not understood their portfolio and felt he had let his wife down in not demanding explanations or action as their capital disappeared. He blamed himself for not questioning but had not known what questions to ask! The fact was that most of their precious money had been lost in offshore investing. I think this was the first time Marion had heard Bob demonstrate his personal feeling of guilt – he had carried this on his own, and I found it hard to listen to this man talk about his pain over the loss of their comfortable retirement.
How poorly value had been delivered to this couple: they should have been empowered to ask questions, to seek other opinions, to ask for an alternative, a more understandable, spread of investments. But they had so little knowledge they had not understood their capital was at risk!
Why was this couple seeking further advice? Because they had a small sum to invest again as a result of downsizing and still did not have the necessary knowledge to make the necessary decisions for themselves. Because they still felt afraid!
This was a couple who had successfully established and run a medium sized business, who had the capacity to learn if taught, but who needed to be empowered to understand any advice they were given, and the ability to say if it is the wrong advice, given their history or because they think it exposes them to more risk than they can tolerate.
Our journey was one of understanding, sympathy and learning together. Today, while their history still hurts, they understand that their new portfolio reflects their low tolerance to losing value and that this may mean a more modest income and growth outcome. They ask intelligent questions and think carefully before giving me informed consent. I hope I have given them back the pride they should have in their business success and that I have replaced their fear with knowledge. If I have done that I have provided value.
I am frequently told my onboarding journey takes too much time, that it is too big an investment in any one client. In return I ask myself, how can I sacrifice placing knowledge and power in a client’s hands for a more efficient office process?
The answer is I can’t: the money being considered is not mine, I did not sacrifice pleasure to achieve financial goals and I need to respect that. I can’t underestimate the difference education makes to a client. Placing the decision-making in their hands, not mine – that is empowerment.
Eleanor Dartnall (AR 285743), & Dartnall Advisers Pty Ltd (AR 299568) are Authorised Representatives of Magnitude Group Pty Ltd • ABN 54 086 266 202 • AFSL 221557 •
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