Money holds a different meaning for everyone; we don’t all want to leave the same legacy.
So, I’ve always found it perplexing that the industry insists on referring to financial planning as a ‘process’.
This implies the same series of steps, principles and methods are taken to give everyone the same results. However, every client has a unique experience, different goals and ambitions and varying ideas of how their money can enhance their lives.
It’s time the industry took a new approach. As financial planners, it’s our job to place the client’s perspective at the heart of everything we do. We should look far beyond providing a financial plan, taking the time to explore clients’ individual experiences in detail and communicate the value of their money in direct relation to their life.
At our firm, this means life planning takes precedence and financial planning helps to make these plans a reality. Advisers take the time to understand what it means for our clients to live the life they want, look after those they love and leave a powerful legacy before the financial planning even begins. Sometimes this means posing questions that may challenge clients’ thinking and daring to dig deep.
Our lives are not all the same, so why would we follow a linear process? Working backwards, advisers should begin with what the client wants to achieve with their money, exploring life goals, and then helping to define a way to reach them.
For example, the experience of someone who is recently bereaved and in need of confirmation that their future is financially secure is very different to that of new grandparents seeking the best way to support their newest family member.
As such, while the principles and methods of financial planning are sound, varied approaches, which account for individual life experiences and events, are required to obtain desired results. For instance, we might facilitate a family meeting between parents and children to enable them to better understand each other’s financial position and how they can be supported.
Providing an open forum means family members can discuss feelings around gifting and receiving and have an honest conversation on the topic, to determine the best outcome. It’s also an opportunity to pose questions that challenge thinking.
In this situation, we often begin by asking our clients: “if you are uncomfortable gifting small amounts to your children while you’re here to provide guidance and support, why would you leave everything to them when you will have no influence at all?”
Another example of taking individual journeys into account is when we work with clients who have spent a lifetime building a business which they are now seeking to sell.
Helping them to prepare for this sale is important, as is considering the emotion behind the transaction. Taking the time to understand what they’ve worked so hard to achieve means that, as an adviser, you can harness that purpose to make sure their hard work continues to deliver in the way they envisaged for the rest of their lives.
Evolving financial planning from process to purpose means shaping the individual experience and acknowledging a one-size-fits-all approach, or a set process, will not serve the ultimate purpose of making their life better.
Colin Lawson is founder of Equilibrium Financial Planning
