Financial advisers need to “shake off the shackles” of product provider influence and focus on delivering a proposition fully focused on each client’s financial needs, according to Paul Armson.
In his book, The Financial Advisor’s Survival Guide, the financial planning coach said products were just “tools in the bag” that often distracted advisers from properly engaging with clients about their financial goals.
With the industry keen to sell its products and so much attention paid to qualifications, products and regulation, Mr Armson warned that many of his peers had “lost the plot” and alienated clients, which could prove damaging under the new fee model.
He said: “We have to start with the client experience, and work back towards compliance, products and investments, not the other way around.
“None of the noise of the financial services ‘industry’ is going to help your clients get what they want. The only thing that will help your clients get what they want is you nagging, cajoling, nurturing, helping, inspiring and encouraging them to identify the life they want and want to keep.”
According to Mr Armson, talking to clients in simple and personal terms without heavy reference to products and industry jargon will make them realise you are concerned with helping them to achieve their goals. When an adviser reaches that stage with a client, he added, it is easy to justify fees and ask for more.
Before RDR many advisers got away with offering an impersonal service to clients because they were unaware of the charges, Mr Armson said, whereas now all fees must be fully justified.
As a result of the regulatory changes, he said, advisers must now deliver much more than information about products and advice methods to clients or face losing revenue.
He added: “The biggest challenge facing financial advisers today is having a service that is worth paying for. In the old days – the days of smoke and mirrors, of initial commission and trail – clients did not really know or even care how they were paying for financial advice.
“With clients now able to turn off ongoing revenue, advisers must ensure their proposition is outcome-focused and provides real, demonstrable value for money.”
Adviser comment
Neil Sadler, chartered financial planner at London-based LIFT-Financial, said: “Mr Armson has a point. The advisers who have the best relationships with their clients are those who help them achieve their goals. This requires the development through discussion and perhaps argument of a sensible financial plan. This is an important skill. Once in place, the plan needs to be reassessed regularly. Advisers who only talk products or in jargon will just put people off making decisions. In recent years, the focus of the adviser community has been on exams and technical knowledge. I went to a Personal Finance Society conference last year to discuss continuing professional development events and almost every suggestion was to do with technical matters rather than soft skills. Well-qualified young advisers coming into the profession is great, but without the ability to talk to people about life, their success will be limited.”
