What a painful client experience taught me about good financial planning

Leckridge, a chartered financial planner at Edinburgh based Aberdein Considine, says he couldn't quite believe the snub at first, especially as he thought the work he'd done was very good.

He'd reviewed close to £4mn worth of investments and come up with several new products to match the client's objectives, get better performance, and optimise her tax bill.

But over time, upon reflection, it dawned on him what might have gone wrong, and he reconsidered his approach to financial planning, with some big changes ahead.

Leckridge has been a financial planner for a decade now. He worked at several Edinburgh firms before joining Aberdein Considine in January 2024. His current role is chartered financial planner but he is due join the firms' executive team shortly.

Originally wanting to be a lawyer, he blamed his high school grades for opting for a job at a bank instead.

His first financial advice job came some years later after he'd already spent a decade in a mortgage brokerage. But it was not an easy entry point. 

I remember being really pleased with the report that we'd created. I thought it was really good. I thought it ticked all the boxes

He'd got his diploma in financial advice from the IFS and had started to work as a self-employed financial adviser when he realised the jump from theory to practice was too big a leap at the time.

"I've gone from, you know, reading a textbook about what investments and pensions were to actually in the real life having to try and explain them to people and recommend suitable investments to meet somebody's circumstances when all I've done is read it in a textbook. I had no experience. So the leap was too big, and I decided to take a step back."

He took a job as a paraplanner, which allowed him to get a grounding in the technical knowledge needed, before returning to advice some 15 months later.

Finding the ideal client journey

When Leckridge started out the client journey he adopted was much shorter than it is currently.

He would typically spend 1.5-2 hours with a client in the first meeting, telling them about the company and process, and attempt to go through a full fact finding process as well.

In hindsight, this did not work well for either him or the clients.

He says the problem was that at this stage the client may not have yet decided if they wanted to work with him. At worst this meant they had to sit through two hours of personal questioning when they'd already made up their mind they weren't going to engage.

Another problem was that many people did not know all the information the adviser needed at that stage.

"You'd be amazed how many people don't know what they earn accurately. Some people will know their gross annual salary. But when you say what's your net monthly, what actually goes into the bank each month...they don't know," says Leckridge.

The same goes for expenditure and other things, he says. And finally, the meeting was trying to cover off far too much to begin with, he adds.

Now his initial meeting lasts for 30-40 minutes and covers the client's reasons for seeking advice, as well as a short presentation of the firm and its processes and the typical cost.

The second meeting is essentially the fact find.

Leckridge likes to prepare the client in advance for that meeting, asking them to bring in all the relevant documentation and also to complete a budget planner ahead of time, as well as a short data capture for them to fill in with all the hard facts.

This is so they're prepared and the questions can actually be answered. The meeting also focuses on the client's needs and objectives and which ones are to be prioritised over others - a central part of his financial planning.

This meeting is still not charged for but after that meeting the research and analysis work starts, resulting in the financial plan, which the client has to pay for.

"I have worked at companies where they charge for the second meeting," says Leckridge, "so if the client doesn't go ahead they've at least covered that time. I've just found that it's very rare for a client to go to that second meeting and not go ahead."

Where that's been the case it's been because there's been an unforeseen change in circumstances, which put them in the wrong space of mind for financial planning, he says.

"[But] I think we shouldn't charge money where somebody's in that situation anyway," he adds. "So I take that it's a risk, but in my experience it's a pretty small risk because it doesn't happen very often."

The third stage is the presentation of the plan, strictly without consideration of individual products or specific investments.

It's all about the plan and anything that might need tweaking. Importantly, he says, it's up to the client to elect what changes they would like to make, "because it's not for me to decide how they're going to change things to make that plan work."

Years of experience have taught Leckridge that the most important thing in trying to get clients to engage with the plan is to "invite them to step forward and take ownership and control of it and I'm just facilitating the decisions that they're coming up with".

In contrast, earlier on in his career, when he didn't use cashflow planning, he would create a report with recommendations for certain products and invite the client to a meeting to talk through it.

He says: "You would be sitting in that meeting with a client with a 30 page report going through the recommendations that you've made, the cost, the charges, the risks and disadvantages, the benefits, the features and all the rest of them. And I've never seen anybody get excited during that meeting.

"But the light bulb moment for me in terms of the client journey was when I moved to a firm where financial planning and cashflow modelling was absolutely central to the whole process. Because it was the first time that I'd ever done meetings with clients where at that third meeting...I've actually seen people get excited about financial planning."

Segmenting the clients

At Aberdein Considine the clients typically pay between £2000 and £3500 for the financial plan, depending on the complexity and work involved.

This mainly covers the cost of putting it together.

The client then has the choice as to whether they want to implement the plan themselves or whether they want to engage in regulated advice.

The majority opt for the latter, says Leckridge. "The majority of people by the time you've got to that point and you've kind of demonstrated your knowledge and your experience and your skill in helping them form a viable financial plan, by that point, most people trust you and want you to then take it on to the next step."

The resulting implementation meeting is all about making sure the client understands the plan. It's also about giving clients the opportunity to ask questions. 

"Some people won't always ask questions unless they're invited to because they feel stupid if they ask a question, and they don't want to look silly.

"But actually if you're having an open conversation with them...and you say 'does that make sense, do you have any questions about that' they're far more likely to come forward and say, 'actually, I didn't understand that'."

"Whereas if you just send somebody a report and then, you know, in the email say let me know if you've got any questions. It really doesn't achieve the same outcome at all."

In total this initial advice process takes anywhere between four and 12 weeks, depending on the providers involved and how long they take to hand over information.

But sometimes giving the client a bit more time is a blessing, says Leckridge, because "you're asking the client to really think about what's important to them over the course of the next one, three, five, 20 years.

"So that's not something you want somebody to just make a snap decision on."

Aberdein Considine also gives the client the option to service their plan themselves going forward if they don't think they need ongoing advice. Though most people think they do.

When it comes to the ongoing service, this is where client segmentation comes in. Proper segmentation, says Leckridge.

Aberdein Considine lets the client agree with the adviser which level of ongoing service they require and what that might look like.

The firm charges 0.5 per cent of assets for a 'simplified' ongoing service, which serves clients who don't need full reviews of their financial plans every year.

The firm's full wealth management service, at 0.75 per cent, gets the client one or more face to face meetings a year with a financial planner to do a full review of their circumstances. 

It means segmenting clients based on their service needs rather than purely on their wealth, so a young wealthy client might have less of a need for advice than a less wealthy client approaching their retirement, says Leckridge.

"You don't just say clients with up to £100,000 invested, clients with £100-500,000 invested, clients with over £500,000 invested, you know, in years gone by that would have been considered a reasonably appropriate segmentation model. Now, that's just not fit for purpose anymore.

"It's got to be based on actually the person's need and the service that you can provide to meet that need."

Reflecting on his past decade practicing financial planning, and especially the years since 2017 when he started using cashflow modelling, Leckridge says: "[I've come to] realise that actually good financial planning is not about explaining to somebody what they already have and good financial planning is not about just recommending products and investments.

"Really good financial planning is about actually listening to somebody's life story and understanding what's important to them, and then helping them to understand whether what they've done so far is going to get them where they want to go or if they're going to have to make some changes."

carmen.reichman@ft.com