'Client goals can't wait for calmer waters, show your value now'

At my age – mid-50s – and with most of my friends within, say, 10 years on either side of that, it’s happening more and more often. 

In the last week alone two friends have got in touch to ask me to help them find a financial adviser. The first, who we’ll call Nadia, is in her mid-40s and has worked for a large company for years. Now, she has quit her job and is going back to university to retrain.

She told me she has been running her own stock portfolio – something that always fills me with mild alarm – but it takes up too much time and she does not want to deal with it anymore.

She viewed this portfolio as her pension, but realises she needs something more formal, and someone to sort that out for her.

Regardless of the environment, the tried-and-tested tenets of investing still hold.

The second friend, who we'll call David, has worked for several companies over the years, like many people. He is in his 50s and it has recently dawned on him that retirement is not too far off. He wants to consolidate the pensions from his various employers and get a better sense of where he is now and where he needs to be.

What do Nadia and David have in common? They’ve reached the moment of truth that often causes people to seek financial advice for the first time. 

It is not the easiest period for that to happen. With interest rates higher than they have been in a generation and geopolitics more uncertain, advisers report they are finding it hard to coax existing clients off the sidelines.

Making their case to new clients, without the benefit of the trust built up over the years, is even harder.

But clients do not have these moments of truth at convenient times.

Often the trigger is a life event, as with Nadia, a change of work circumstances, or perhaps an inheritance. Or, as with David, it is the realisation that the years have slipped by and making a plan for retirement has quietly become urgent.

There is a whole group of people out there having these moments every year – not because of global events or what is happening with interest rates, but because of their own age and stage of life. 

Meanwhile, existing clients are still experiencing their usual problems even in a turbulent world. And the clock is ticking: their goals can’t be put on hold to wait for calmer waters. 

Regardless of the environment, the tried-and-tested tenets of investing still hold: diversification; time not timing; dripping money in if you are uncertain. Equities still beat inflation over the long term.

What has changed is that you need to work harder than in the low volatility, zero-rate years to demonstrate your value and prove all this to your clients. 

What can you do? You can talk to them about inflation – the real cost of staying in cash. Sure, clients can get more on their savings these days, but their spending power is being reduced day in, day out, and where’s the growth going to come from? 

You can use digital engagement to get clients thinking about risk and reward. A simple invitation to update an online risk profile is a great catalyst for a conversation.

Experience tells us that people who have invested for a while tend to get more comfortable with risk over time, so clients may even find they are happy to take on more risk than previously, supporting you to make the case that sitting on the sidelines is not in their best interests. 

You can also use cash flow planning tools onscreen to bring clients back to their long-term goals and get them focused on their underlying needs and objectives.

Cash flow modelling is a powerful way to demonstrate the range of outcomes that can be achieved through investing, versus the certainty of losing money in real terms in the bank. 

There is no referee who is going to blow a whistle and say, 'Okay, the stock market’s going to go up now, come back in'. 

Despite global uncertainty and the pressure of high inflation, the investment landscape in 2023 has been better than many feared and multi-asset performance has been tracking up for the last six months.

Dynamic Planner Risk Profile 5 returned more than 7 per cent in the year to September, and Risk Profile 7 returned close to 10 per cent – both ahead of CPI inflation of 6.7 per cent over the period.

Even with the best deals, and with their money locked up for long periods, clients could not have achieved these levels of return through savings.

So what’s the problem? It is that investing right now does not feel good. 

But as someone reminded me recently, there is no referee who is going to blow a whistle and say, 'Okay, the stock market’s going to go up now, come back in'. 

Supporting both new and existing clients to understand that, to see that it’s not about this moment in time but about their goals for the future, is a powerful way to add value. 

Ben Goss is chief executive of Dynamic Planner