The financial service industry's domination by product providers has encouraged advisers to focus too much on their clients' finances, George Kinder has said.
Speaking to FTAdviser, the life planning trainer said advisers need to consider their clients' lives in the round and help them achieve their life goals.
When asked why some advisers did not do this, he said: "Because they are dominated by product thinking. The industry is dominated by product companies, by banks and insurance companies.
"Financial advisers are trained in many ways to sell their products and to sell their ideas that those banks and institutions have and those institutions are primarily driven by profit which comes from the sale of products.
"Their primary focus is not on the delivery of freedom to the consumer but that is what the primary focus of a financial life planner is."
Mr Kinder said that while advisers considered the biggest risk to be a crash similar to 1929, for their clients the biggest risk was not being able to live their lives to their fullest potential.
He said: "It stuns me that the question [of why advisers should take an interest in anything other than their clients' finances] is still out there in the 21st century.
"I would have thought it would have died in the 20th, but it is still out there and it speaks to the history of the financial planning and financial advice industry, coming out of products primarily and secondarily out of laws and spreadsheets.
"What is the planning for, if it is not for the client's life? And if you don't really understand who the client is and have the skills to have a relationship that reveals that then it is very difficult for you to actually deliver on your plan.
"The financial advice industry, if you look at surveys of trust, they are almost as low as politicians. Journalists are just a little bit better.
"One of the ways to think about why financial advice has gone in the wrong direction is to consider what the greatest risk to a client is. Classically we have thought the greatest risk was a 1929-style collapse or a 1973/74-style collapse.
"As financial planning developed we began to realise it was not having a financial plan in place because it could have as much to do with the failure of insurance or a failure of retirement planning or estate planning as a collapse in the markets.
"But what the client feels would be the greatest risk is for them not to live into their life of freedom, not to live into their dream of freedom and that's what life planning delivers."
damian.fantato@ft.com
