OpinionNov 29 2022

Financial advice is often compared with therapy – and the comparison is not lazy

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 Financial advice is often compared with therapy – and the comparison is not lazy
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A friend recently told me she had sought financial advice for the first time.

During the conversation with her adviser, she realised she had been making a lot of simplifying assumptions about her finances – and as she talked about them, she realised they did not hold water.

She also found she needed to go into details she had never discussed with friends or even with her partner. 

She liked her new adviser, who was a friend of a trusted friend and who got to grips quickly with her circumstances and needs, but she found the whole process more unsettling than she had expected. "It’s quite exposing, isn’t it?" she said.  

In the industry, financial advice is frequently compared with therapy – and, as all experienced advisers know, the comparison is not a lazy one. There are only a handful of professions in which the first encounter involves delving so deeply into aspects of a person’s life that are rarely talked about openly.

Many people come to advice following a bereavement or other challenging life event. Many people find the first meeting is also their first confrontation with difficult realities about their own lives – the idea that their successful and rewarding career will end at some time, the need to plan so that children or other dependents can thrive without them.

Advisers become skilled at handling these tricky initial conversations and gently pushing clients to start thinking about the decisions necessary for a secure future.  

And research suggests they are navigating this more and more. A recent survey by the Chartered Institute for Securities & Investment found a sharp rise in people seeking financial advice, fuelled by the cost of living crisis.

Before this latest source of economic uncertainty took hold, the pandemic had already sent a wave of people looking for help with their finances, as well as causing existing clients to contact their advisers more.   

According to the CISI, people are seeking advice at a younger age, and more women are seeking both financial advice and guidance.

This is all good news. As an industry, we understand the need for people to start saving for their futures earlier, and for women, in particular, to make robust financial plans given the persistent challenge of the gender pensions gap. 

In the post-Covid-19 world, many more of these initial conversations are happening online as advice firms retain the hybrid working models they put in place during the pandemic.

Is there therefore an opportunity to think again about best practice for new client meetings? 

Reading the room

In face-to-face meetings, part of the work of establishing a rapport is unspoken: relaxed and open body language, a tactful nudge of the tissue box across the table at the right moment in a sensitive conversation.

Some of this translates to Zoom: it seems likely that we are getting better at both giving and reading nonverbal cues on video conferencing apps all the time. 

But this is just the beginning. Technology can do much more than provide a simple imitation of in-person communication – although the efficiencies already created for advice firms by the increased use of video calling are not to be sniffed at. 

This week, I am attending a conference. In the run up to the event, I received emails from the organisers every couple of days to help me prepare. "Ben, to get the most out of the event watch this two-minute video/read this blog post." "Ben, three things to do before you attend."

Of course, though these tasks were individually brief, they did require me to take some time out of my day. But they meant I was thinking about the conference before I got here and was clear about what I wanted to achieve and how to go about it.

Similarly, in the advice industry, we can use technology to help clients come to that initial meeting feeling prepared – whether that is with short videos or interactive checklists detailing the information they might want to bring, or quizzes and questionnaires that can help them to start interrogating their attitudes and beliefs beforehand. 

With the best remote apps, advisers can transform the 'know your client' process into a 'know yourself' process, encouraging clients to understand their priorities and enabling them to become active participants in their own financial journeys. 

As my friend described, it can feel very difficult for clients to hold a mirror up to themselves and their finances in the way that the initial meeting can require – and that is true however skilled the adviser is, and however understanding the adviser's approach.

This process can feel less confronting – and clients can feel better armed for the conversation – if they do some thinking first.  

By harnessing technology before and around the first meeting, advisers can begin the work of getting new clients from where they are mentally to the level of understanding and confidence that can support them to make the right decisions for their future.

And they can begin a relationship that often lasts a lifetime on the best possible footing. 

Ben Goss is chief executive of Dynamic Planner