Three Steps To Heaven

Financial planning steps, financial advice, financial objectives

In the old days there was one method for providing financial advice.

Fill out a fact find, get all the information about the client. Go through it, see what gaps there are (life assurance, not enough pension) and then recommend the product to fill the gap.

We’ll call this ‘Advice’

It could also be called selling – in both forms. While mis-selling was clearly all too prevalent, there is also the old adage that ‘pensions are sold, not bought’. Sometimes selling skills are needed to give people what is best for them.

Over the last decade or so, a stage has come in prior to advice. It’s all around seeking client objectives and then structuring a plan to help achieve those objectives.

Let’s call this ‘Planning’.

The modern adviser is called a ‘financial planner’ and asks for the client’s objectives. Maybe they’ll set up a cashflow model to demonstrate how these might be achievable and what assumptions are required, then move to the ‘Advice’ stage to recommend appropriate products and investments to bring the plan to fruition.

Planning first, then Advice.

There are many advantages of planning. It tends to breed much longer client/planner relationships. Imagine actually looking forward to meeting with you financial adviser! A review meeting to find out how much closer you are to achieving your long term objectives.

Financial planning is definitely the future of financial advice. And yet, in a way it is also the past. You see, we believe that there is a third stage in the process, one that must come before Planning and Advice.

Click To Tweet: “Financial planning is definitely the future of financial advice” @ovationbristol

Let’s call it ‘Coaching’.

When a client responds to the question ‘What are your objectives’, how honest are they being? With you, and with themselves.

I recall hearing a presentation when I was in my early twenties. The presenter asked when we’d all like to retire. Someone said 65. Someone else went for 60. Then someone got cheeky and said 50.

“Really?” said the presenter. “Because I’d like to retire tomorrow.”

There are all sorts of reasons behind our objectives. The objective of coaching is to help a person to understand themselves better, perhaps to unlock new objectives, maybe even to dream a little.

Once we have greater clarity over those objectives, those like motivations, only then can we move to the second stage of planning. Then we can map out a path to see if those dreams could become reality. Finally we use Advice to provide the tools, the products, to make it happen.

Coaching is a state of mind. It requires a clear intent to listen and observe. It is in many ways the opposite of advising, which involves providing solutions. Coaching is exploring and dreaming.

The result is a financial plan for a client truly about identifying a chosen future, working out a plan to get there, then monitoring progress along the way.

Coaching, then planning, then advice.


Originally published on Adviser Business Review

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