Turning consulting into collaboration

This is the third in a series of three articles about changing the financial advice conversation, and was published in International Adviser magazine in February 2018.

In the first article about how to have better conversations, I wrote about the historical business model challenges that many advisers face, and I offered 10 signs that you’re having the wrong conversations. In the second article I wrote about the mindset changes needed, in order to become truly client centric, and suggested the magic of great questions that advisers need to be patiently asking.

I now want to explore the conversation advisers have when they go back to clients with recommendations, having understood the challenges and collected all the data.

Transactional distribution will be disrupted

In product-selling situations, the next conversation is typically about having a recommendation and all the paperwork ready, overcoming any objections, closing the deal and ‘getting the business’ – that’s mostly about selling other firms’ products.

In the future, it’s going to be difficult to get clients to pay for a superficial conversation and a product sale, and this transactional ‘distribution’ role won’t allow advisers to continue earning what they’ve been used to. Since the business is transactional, advisers are unlikely to be building any lasting business value either.

If you don’t believe this, just take a look at what blockchain is promising to do to intermediaries.

The 6 step process is out of date

For many good financial planners, who are following the 6-step financial planning process, the next meeting will involve presenting the recommendations to the client in a plan. The adviser will have done lots of research and written a comprehensive report. Sometimes this is sent to the client, and often it’s presented to the client directly at a meeting. It’s highly logical and seems to make sense, but there are some challenges thrown up by the 6-step process itself.

  • It’s an expensive process – All that analysis and research takes a long time
  • It’s dis-engaging for clients – It’s being done in the back office without their involvement.
  • It’s not responsive – If there have been any changes to the data, or the client suddenly throws in a question that changes everything, the report may have to be done again.
  • It’s mostly still contingent upon the sale of products to get paid.

Consultation vs Collaboration

The 6-step financial planning process is a consultative process that was developed in the 1960’s and was designed for a world that didn’t have computers or the Internet. What’s more, the world has developed a whole new level of complexity, and financial planning for most reasonably wealthy individuals is a seriously complex ‘problem’ with many variables and moving parts. Change one area and it instantly impacts another. Answer one question and it raises several more.

The production of a static, written report doesn’t allow for the fluidity of the exchange of ideas in a conversation. It certainly doesn’t allow for multiple scenarios to be explored and discussed

I believe the answer lies in deeper conversations, open discussion and exploration of the trade-off decisions that people face in their lives,. It also requires collaboration and co-planning, built around the real-time presentation of scenarios, using great technology. Scenarios are possible future situations that enable clients to see what their future stories might look like. With hyper-complex problems, such as financial planning, writing a static report with all the ‘correct’ answers, doesn’t allow for the necessary engagement required to learn, understand and adapt.

We need to be able to simulate scenarios and see what happens in the bigger picture. Now that would be really engaging.

Consultant to Coach

The role of the adviser then changes. We get to encourage clients to ask questions they haven’t thought of, or don’t know to ask – even if it’s potentially detrimental to a product sale. Instead of overcoming objections, we get to raise objections to ensure clients fully understand the implications. That’s the difference between disclosure and transparency.

Having such coaching style conversations brings about deeper client engagement. It’s also more rewarding, financially and emotionally for the adviser. Trust can happen in a matter of minutes, the adviser’s sense of purpose increases dramatically, and getting paid isn’t a problem – even if there isn’t a new product required.

The threat of machine learning

Are robo-advisers a threat or an opportunity for advisers? I believe the answer is potentially both, depending upon what advisers are currently delivering. The robo sales process is linear, when the financial planning process is cyclical. At present, robo-advice looks like a big threat to lots of advice firms that are essentially just following a linear process and selling products or choosing investment funds with expensive human advisers.

However, for a tech-enabled adviser, offering lifestyle and scenario planning, there’s really no threat likely any time soon.

The bigger picture

Our skills as advisers need to be centred around asking better and deeper questions and helping people to see the bigger picture. We must help clients increase their understanding of the conflicting trade-off decisions they face in their lives, managing their emotions and behaviours, and ultimately getting them to informed decisions that support the life they really value.

The solution is not an ‘information age’ consultative process, it’s a ‘digital age’ collaboration process and it requires a professional scenario planning tool. We must focus on having human conversations and show people the impact that their decisions have on their lives.

If that’s done well, advisers will not only find more enjoyment and purpose in their work, but will also find clients are more deeply engaged, have no reason to leave and continue to willingly pay us for valuable support.

And what this ultimately means, is that advisers are more likely to be building sustainable businesses that last.


Read article 1 – 10 signs that you are asking the wrong questions

Read article 2 – The magic of asking great questions

Scroll to top
%d bloggers like this: