What’s it like being a new potential client in the first meeting with a financial adviser?
I got the chance to test this out for myself recently. Let me tell you about it.
Like most people, my need to speak to a financial adviser was triggered by an event, or more accurately, the fear of an event taking place… in this case, my death. I have a UK financial liability that is no longer covered against my death.
I’ve already done the planning and I know I need cover of R1 million. I rounded it up to that.
Our medical aid is with a particular insurer here in South Africa, and my wife called them and made arrangements for us to see someone. She spoke to the planner and says she asked how long the meeting would take. He said 30 -40 minutes at most and asked us to bring our bank statements, and ID documents – which we didn’t take.
Why would I want to show a total stranger my bank statements?
It occurred to me that he might know who I was, and I expected the first meeting to be a general chat to understand each other, and decide if we wanted to work together.
We shook hands and he sat us down
The shared-office was sterile. The kind of office where there has been no thought whatsoever to how it looks or feels. Atmosphere like the moon! A rectangular table, his chair one side, two chairs our side and a flip chart to one side. On the desk was a notepad and some regulatory disclosure forms. On the notepad were our names.
It immediately dawned on me that he didn’t know who I was, and I had a little “Don’t you know who I am?” mock indignation moment to myself. That meant that the meeting would be real though.
He was aware that we were there to talk about life assurance. He asked if there was anything else we wanted to talk about? “No, not really.”
Sorry about the compliance
He then gave us a business card each. I looked at it. It said “financial planner.” And then he made a lengthy apology, “For all the compliance.” He explained that the regulator forces him to fill in an FNA and make certain disclosures, and it was a pain but that was the way it was.
Normally he would use the information to produce a financial plan ‘like this’ (separating thumb and forefinger to indicate a large document). If we didn’t want to fill in an FNA then that might impact on the recommendations but we could decide. However, he was obliged to give us the disclosure documents and he slid them across the table, asking us to sign the disclosure notice.
My wife asked what we were signing. My wife hates financial advisers. It’s not personal, evidently, otherwise she wouldn’t have married me, but she was unsettled by being asked to sign something in the first five minutes of our meeting. He went into an explanation of disclosure documents and broker notes and suggested it would be sensible to have one adviser appointed across all our policies.
So, he focused on compliance and he did all the things he was supposed to do. We signed the disclosure notice, despite my wife’s discomfort. And then it was time for questions.
Asking great questions?
What’s the story with the life cover? How much do we need?
I explained the purpose and that I needed R1 million, and somehow, we got into a detailed discussion about how it should be structured. And then he asked if I had any children, which for me is a complex question. Well, it’s an easy question to answer. The answer is “Yes.” What’s complex is my family history.
“How old are the children?”
“8, 11 and 27”
I offered… “The two youngest are here in SA and the eldest is in the UK.”
He seemed happy with that, and then said “R1 million isn’t enough.”
“Well there’s more money available in the event of my death.”
Inside, I could feel an argument coming on. How could he possibly know what I needed, with the limited information available so far? He started to explain how my kids would need maintenance, school fees, etc. etc., and asked how much the extra cover was. I told him, and said it was in a retirement fund and that I’d worked out there would be sufficient capital to cover the kids with plenty left over. He was adamant it wouldn’t, and said he would need to put together a plan.
Lacking in trust
I could feel myself already becoming reluctant to share any more information. Why do we feel the need to argue with potential clients in the first meeting? I was feeling attacked, and at the same time it seemed he assumed that we should simply trust him to put together a plan that will be better than the one we currently have.
He then started to tell me that retirement fund values fluctuate, and he asked me if it was in a high equity fund (if you’re a ‘normal’ client what does ‘high’ mean?).
I said “Yes.” and he explained that he would rather see the money invested more conservatively, so that in the event of my death, at a time when the market had fallen, the capital would fall less, and still be able to deliver the death benefits needed.
I said I understood that, but the purpose of the retirement fund was to generate income benefits later, not specifically provide death benefits for the children. “Wouldn’t I be making a retirement income trade-off by investing more conservatively?” He conceded that I would. In this moment I found his approach arrogant – I thought, what gives advisers the right to tell people what to do with their money, especially before they even understand them?
I was thinking; “Why are we even having this conversation?”
He then talked about income protection and critical illness protection and asked if we wanted quotes for this cover too. We said “Yes.” I was keen to see how he would handle it. And of course he wanted to know our incomes. I gave him some vaguely relevant numbers, slightly on the low side. Again, a sensitive question that requires a deeper level of trust.
I wasn’t really comfortable giving him this information. We hadn’t developed a relationship yet and based on the direction of the conversation thus far, I wasn’t getting a warm and fuzzy feeling.
So, then he gave me the FNA and asked me to take it away and complete it. It’s an absolutely shocking document. It’s hard to complete, has loaded jargon-filled questions designed for the advice firm, not the client, and has an internally-created risk tolerance questionnaire that is really dangerous.
I have subsequently completed and returned the FNA, but frankly it tells him very little about us.
And then I asked about his fees.
“Ah, some advisers have started charging fees, but we don’t do that. We’re the good guys.” *raised eyebrow!* He went on to explain that the company pays commission and he doesn’t charge for the financial plan or any of his services.
We finished the meeting because we were way past our 45 minutes, and my wife had another meeting to go to. I was reminded that 30-40 minutes isn’t nearly enough time if you’re going to get into the detailed fact finding questions, and the first meeting just isn’t the place to do this.
Financial advisers seem to be oblivious to the discomfort that potential clients feel in the first meeting when being grilled about their personal affairs. And we wonder why people struggle to trust us.
The most important conversation
The most important conversation that takes place during the first meeting process is the one that the husband and wife have in the car, on the way home. I asked my wife how she found the meeting. “Uninspiring” was the answer, “And I wasn’t expecting him to ask for all that detailed information.”
And so, I subsequently followed up with the completed FNA, and we received the quotes for:
- life assurance
- income protection
- critical illness insurance
The sums assured were based on what the planner thinks we should have based on a single discussion and a quick follow up call, during which he did ask me what I did for a living. He still doesn’t know who I am!
We’ve not had a financial plan “like that” (or at all). I’m not sure what a financial plan would be or how he would create one from the information he’s got, but I am curious.
Are you going ahead?
He left a message for me the other day to ask whether we wanted to “Go ahead with the quotes”. I think the next meeting will involve agreeing sums assured and premiums, and filling in forms. Based on the very basic information I gave on the FNA about our income and expenditure, there isn’t sufficient affordability for all the premiums. There’s been no analysis or discussion about that though.
Maybe he would ‘get the business’ and maybe he wouldn’t, but a few things are certain.
- We’re not engaged in the process because it’s not about us
- We don’t feel trust, and the experience hasn’t been good
- We wouldn’t be willing to pay for this, so in a few years this guy probably has a problem
- If I had a South African ID number, I’d probably be doing this online without a broker
So what do you think? Is this financial planning? Can it be done better?
If you’re a financial planner and your first meeting process looks like this, and you’re getting similar results, then let me assure you that there’s another way to go about this.
If this planner had done a little bit of research before our meeting he would know that I help planners just like him ask better questions, have more engaging conversations with their clients and have great first meetings. I help them deliver a lifestyle financial planning experience that their clients will willingly pay them for.
It’s about value – it’s not about being a ‘good’ or ‘bad’ guy. Are you confident that you can create and deliver an experience that you can charge your clients for?