10th June 2024

The biggest challenge (and opportunity) in the financial planning process

In a perfect world a client goes through the financial planning process and implements the recommendations and advice they are given. As a result, they are happy and achieve their goals.

Yet we are not living in a perfect world, which presents both a challenge and an opportunity for financial planners and their financial planning process.

What is the value of advice?

There is a lot of talk, particularly online, about the value of advice.

But I am going to suggest that financial planning and advice, in and of itself, is not worth much.

Why would I say this?

Because providing great advice is one thing, but realising its value depends on implementation.

What percentage of financial advice gets implemented?

This is very difficult to quantify. However, there are some clues, and it is a problem not just in financial advice but across professional advice in general. 

For instance, Harvard Professor Robert Kegan found that despite good intentions only one in seven people took their doctor prescribed medication. Even though their health depends upon doing so.

Moira Somers PH.D., author of ‘Advice that sticks’, estimates that less than twenty percent of professionally provided financial advice is implemented.

Whose responsibility is the implementation of advice?

You could argue that it is the responsibility of the client to follow the advice that they are given.

But, to me, this is a cop out.

It reflects poorly on the advice giver if clients are provided with perfectly good advice but do not take it.

So, what can you do?

Firstly, it is helpful to realise that in many cases you can expect resistance from people to making changes.   

This is not personal in the sense that they are resisting you.  

There can be many moving parts within the financial planning process, and this is on top of the fact that many people resist any kind of change (as evidenced by Prof. Robert Kegan’s research).

Some of the things you can do are:

1. Ensure your client is emotionally engaged.

2. Check with the client throughout the process that they have shared everything they need to share.  

3. Anticipate obstacles and agree with clients how these will be dealt with if they arise.

4. Associate your recommendations to your client’s goals, highest values, and purpose. Make sure the client is in agreement with these. 

5. Agree the tiniest, do-able step that the client is willing, able, and ready to take.

6. Check in with the client and offer further assistance if necessary.

Although the above is not a complete list, the important thing is that your financial planning process anticipates potential non-adherence.

The main point is that you are slowing everything down.

This does not mean dragging things out and making the financial planning process much longer. It means creating an environment that anticipates obstacles and having systems in place to overcome them.

P.S. Did you enjoy this article? 

You can download a FREE copy of ‘Magical Client Meetings Every Time.’ You will discover the ten essential keys and use the score sheet to immediately determine your next steps. Click here to download. 

Business Development, John Dashfield, Dashfield Coaching & Development Ltd