Tools will not rescue poor planning advice
Recentlythis title published an article by one of its columnists which questioned what status tools such as risk profiling conferred on the planner in the event a client sought legal action over investment returns.
In this edition, the next chapter in this debate has been written, with the author — a solicitor — stating that risk profiling and risk tolerance should not be the main focus of the financial planning experience. Rather the focus is on forming appropriate client expectations and then meeting those expectations.
Anyone who has been involved with financial services for any length of time will know this is at the heart of the know-your-client rules.
Which brings us back to the heart of the whole matter — how does a planner get to know their client and how do they go about meeting client expectations?
Client expectations can invoke a whole range of ideas and while issues of value added service and facilities are important, without growth in their investments the client’s view of their expectations being met is highly unlikely.
Like much of the planning process, meeting expectations would involve the use of systems or tools. Yet financial planning is not a science but a personal relationship and tools, while useful, can only fill some of the middle ground between a planner and client.
Why is this issue so important? As was said in this column some weeks ago, never before have there been as many people in the market with the highest levels of investments and education seeking the best returns, but also the best value.
This means that meeting client expectations is not an optional concept but something that many planners will have issues with over the coming months as they try to explain to their clients what went wrong with their investments in the recent poor return markets.
At this stage any recourse to the tools they used will be pointless, regardless of whether it was an administration platform, planning software or risk profiling tools. The old saying about a poor tradesman blaming his tools will in many cases hold true but clients will pay that no heed as they concentrate, rightly or wrongly, on the relationship with the planner, because that’s where the expectations should have been met.
AUTHOR
Jason Spits
Recommended for you
Two commentators have shared why the inclusion of alternatives in a diversified portfolio shouldn’t be a simple switch with a traditional asset and will depend heavily on clients’ objectives.
Morgans chief executive, John Clifford, has announced he will step down from the wealth management group after eight years leading the business.
Funds under administration on the BT Panorama platform have passed $120 billion in the last six months as it progresses its migration of Asgard into the platform.
Private markets may be the hot topic of the day but two financial advisers have shared the red flags to consider and why advisers shouldn’t be tempted to invest solely in the pursuit of higher returns.
