The Personal Finance Society, alongside financial planning practitioners, has launched a 'power planning' approach that focuses on the outcomes and feelings experienced by clients.
Announced at the Festival of Financial Planning today (November 2), the new approach measures human outcomes, rather than purely financial ones.
The new initiative, which will sit under the PFS Power initiative that launched in 2017 at the last PFS Festival of Finance, has been created by the PFS's Financial Planning Practitioner Panel, and will help offer guidance as the PFS expands its CPD programme.
Power Planning will focus on the outcomes of:
- Clarity
- Comprehension
- Choice
- Control
- Confidence.
Duncan Parkes, compliance director at Old Mill, who sits on the Power panel, said planning through this lens has the power to improve outcomes for financial planning businesses, for everybody in the financial planning profession and, most importantly for the consumer.
Alongside his existing role, Parkes said he spends a lot of time developing the financial planning position within Old Mill.
“Financial planning means different things to different people,” he said. “That is the dilemma that the PFS business owners and practitioners planners face.
“How can we therefore take our profession forward if we're not all heading in the same direction?”
Defining financial planning
Parkes said the PFS should not tell planners what to do or how to do their job, nor does it want to.
"It would stifle innovation [and] it would stifle creativity," he said.
The solution the power panel came up with focuses on what is trying to be achieved for the end client, rather than focusing solely on financial planning procedures.
The five outcomes the panel outlined were: clarity, comprehension, choice, control and confidence.
Parkes explained that the clarity bucket focuses on human outcomes, which also fit into the comprehension outcome.
“Once we have something to plan for, we then need to establish the resources that the client has available to them to help them plan - the good old fact finding exercise.
How can we therefore take our profession forward if we're not all heading in the same direction?Duncan Parkes, Old Mill“But perhaps it can be done slightly differently. Rather than focusing on what you do know about a client, have you ever focused on what you don't know?”
He told advisers to try and visualise the outcomes from a client perspective rather than a financial planning perspective.
Parkes added: “In short, this new approach does not tell people what to do. It does not tell people how to do it.
“But what it does say is that in order to deliver financial planning, you should be working towards a certain number of outcomes for all of your clients."
sonia.rach@ft.com
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