There is a growing recognition of the role of financial planners as lifestyle planners or strategists in helping clients achieve their lifetime goals, rather than simply achieving an investment return.
There is a growing recognition of the role of financial planners as lifestyle planners or strategists in helping clients achieve their lifetime goals, rather than simply achieving an investment return.
Yet financial advisers are poorly prepared for the challenge of helping clients focus on their lifetime goals. It is estimated that only 2 per cent of financial advisers have a thorough and comprehensive lifestyle planning approach that is holistic and meets the needs of clients. The focus in the financial planning in-dustry continues to be on short-term investment returns and less on understand-ing the lifetime goals of clients.
In this respect, our industry is failing clients. Unless we educate clients to understand and define what they really want from life in retirement and how they will expect to live, a significant proportion of clients will face retirement with uncertainty and fear. These clients may well have a nest egg, but how will they spend it to ensure their happiness? How will this nest egg enrich their new life in retirement? Clients may well ask their adviser at retirement day: What was the point of that great financial plan if I didn’t reach the lifestyle goal that it was all designed for?
Financial advisers can’t assume that clients have control of their future life-style expectations. The onus is clearly on planners to help clients define and visualise what they want out of their life as a result of having a good finan-cial plan.
Studies have shown that retirement is the 11th most stressful event in a per-son’s life. Some studies also indicate a link between retirement and death, sug-gesting many people can’t see a quality life or reason for living beyond retire-ment. Most retirees have never been taught how this time of life change will af-fect their well being and so few are adequately prepared for the challenge.
Few financial planning groups have turned the advice process on its head to re-flect the client’s world view by first asking clients how they would like to live in the future, specifically, and then; what financial strategy would they need to do to get there reliably?
Financial advisers have a unique opportunity to be truly influential in the suc-cess of their clients’ lives. But to be effective lifestyle strategists, finan-cial advisers need to start thinking and acting like coaches in life for their clients.
Financial advisers have a major responsibility – to encourage their clients to stick to a clear agreed strategy that has built-in flexibility and will get cli-ents to their life goals at an acceptable level of risk.
Advisers should be the guides on this financial journey, with comprehensive lifestyle planning being the important first stage. Seeing the goal that they work towards is at least equally important for clients as the investment per-formance numbers each month or each year.
As a lifestyle strategist, the adviser’s challenge is to keep people focused on the end goal – the happiest lifestyle possible. This will be no easy task when the sharemarket is booming and clients are continually bombarded with the latest financial products. Financial advisers will need to be courageous and resilient in keeping clients on track in this environment.
Ian Hutchinson is a lifestyle strategist and runs workshops on lifestyle plan-ning for financial advisers and their clients.
