Category: Blog

My daughters commit me to pinky promises, a challenge, no doubt faced by many parents. I accept these invitations reluctantly knowing the weight of expectation that it carries. Should the outcome not correspond exactly with the idea my girls had in their heads, I set the stage for disaster. The repercussions range from floor-stomping, demon-infested tantrums to hours long, guilt-inducing, daddy-shaming silence.

I’ve been taught to be deliberate about the promises I make with my girls. If I think there’s a chance I’m not going to deliver, I won’t entertain the possibility for suffering. Extended to other areas of my life though, I get the sense that not everyone takes it quite as seriously. It might just be me, but it feels like my day is filled with promises made by others, mostly inferred though, to be honest. Google maps promises I’ll be on time; Tim Noakes reckons I’ll be thin and fit; my doctor tells me I’ll get better; and my vehicle manufacturer tells me their car is reliable (did I mention my infrequent driving happens in a Land Rover?).

If I give some thought to it though I have to test for myself, “How reliable are their ‘promises’, really? And to what extent will I really hold them liable like my daughters do in the event of a unexpected outcome?” On reflection, not sure if you’ve ever noticed, but doctors never offer their pinkies in the gesture of a promise that “Everything is going to be okay.” In as much as I hope there’s some sort of inferred promise that if we follow the instructions, we’ll get better, the reality is they actually aren’t guaranteeing a thing. What they offer up is more like, “The presenting evidence suggests you have Influenza. Penicillin has shown to be effective in its treatment. Follow this schedule of medication and you could get better. If not, we’ll try again.” Have you ever gone back to your doctor and said, “I want my money back, I’m still sick”? I haven’t. Have you ever written a letter of disgust to Google Maps because your trip from JHB to CT was inaccurate? Even by several hours? Not me.

I realise that these guys are more cunning in the un-promises or pseudo-promises they make. Perhaps it’s because they know that life is uncertain and there are many factors that will influence the actual outcome of an event. Doctors know that you might get better if you take the penicillin, but you might catch another bug, or do something stupid that undermines your progress. Same with Google maps. If you need to stop for petrol, or get into a fender bender, or need the toilet … you get the point.

Sometimes I get the feeling though that we make pinky promises when we do financial planning. I can totally imagine a client turning around in two year’s time and saying “This isn’t what you said!!” It feels like the processes that we follow set clients up to thinking that the world is finite. We set them up to thinking that there’s a science in predicting the future and we have the crystal balls to foretell it, especially when our conversation is based on the point of the graph that happens to be five, ten, twenty years away.

I’d like to be more like the doctors. Take more momentum from saying, “Let’s work with what we can see today. Let’s make tomorrow better than today. And then let’s check in tomorrow, and work on the day afterward.” I feel like we need to get better at managing client behaviour over time than giving them a list of instructions and a pinky promise that everything is going to be alright. That’s where we lose credibility over the long-term.

We’ve seen some serious evolution in the profession of Financial Planning. As a profession that has sprung up out of a hard-core sales world, I think we can be proud to see the ever-increasing inclination toward ethical practice and good outcomes for clients. I still think we’re trying to shake off the “policy-smous” reputation reminiscent of our beginnings, but things are improving. I recall the start of my career, nearly 20 years ago now, training financial advisors at the time, we would joke that second to traffic cops, “financial planning” was the most despised profession.

Given the bad rep, even the policy-smous age had some good elements though (although admittedly, also many poor ones). What it did do, was get the client to the point of implementation. Although there wasn’t much in the way of ensuring it was an appropriate one, it was an effective mechanism to get clients to take action. Fortunately the tactics to overcome inertia have moved on, but the fact stands that without action, no amount of even the sincerest of pontifications can have any positive affect for the client at all. Getting them to take action, usually involving some sort of financial product, is undeniably a critical element in improving their financial circumstances. Let’s think of this part of a good financial outcome as appealing to the HAND, the metaphorical symbol for action and implementation. And it still feels like there’s plenty of opportunity for more evolution, making it easier for clients to access financial advice and to execute the outcomes.

Then things started evolving a bit and we started making an appeal to the client’s HEAD. We started doing a better job of analysing their portfolio, tax situation, cashflows over time, estates over generations, personal risks, and so on. This was an important advancement as we cultivated the tools and artefacts to validate the need for a trained specialist in the profession of advancing our client’s financial welfare. Unfortunately though, so too did the profession start becoming more fancy. To show clients how clever we had become, we’d speak to them in a language that they couldn’t understand. Big documents, reams of analyses, economic commentary, graphs, regulatory jargon and terms & conditions. We were living and breathing this new HEAD-space. I recall sitting in FPI sessions listening to Marius Botha (not to pick on Marius, I think he’s awesome) speculating on the “… promulgation of sub-paragraph B of the white paper separating the discourse of neo-libertarianism behind the state of Section 11W …” etc , etc. And thinking “What the hell?!?!” Which planners were talking to which clients about this crap? As a CFP Professional, I didn’t have the inclination to stay tuned in for longer than a minute. What must clients think? And I’ve seen planners that speak to clients in the same way…

Not to take away from its importance, good client outcomes need to have an element that appeals to the HEAD as well. But if your clients are saying to you, “You choose, you know best”, metaphorically, you haven’t flipped on any lights for them. You may have been telling them a whole bunch of stuff but unless you actually help them to hear, you haven’t made any connection at all.

Finally, I think we’re in the process of moving into the age of the HEART. This is the age where we make genuine, generous connections with our clients. We stop dealing with clients as “experts” and rather make connections where clients can feel truly enlightened, empowered and in control. We speak to them on their terms, deal with their money so they can understand. We’ll know when we’ve connected with the HEART. Clients feel inspired, committed, impassioned. Getting to this point isn’t obvious or easy. You have to help clients make the connections between their money and their day-to-day lives. And help make the day-to-day stuff feel like it counts. If your advice process looks the same as it did ten years ago, I bet your clients are missing the third important ingredient.

The real magic happens where we connect to clients with the HEART, HEAD and HAND. This is the space where clients are committed to their plans and conscious of their behaviour. This is also the space, not-so-coincidentally where clients are committed to the financial planning relationship and experience real value.

I don’t think it would be at all provocative to say that technology is improving our ability to give our clients significantly improved financial planning experiences. From CRM engines that help us remember the names of their cats, financial planning tools that print out fancy looking reports and aggregation engines that put all their stuff into a single pot, it feels like we’re almost able to replicate a very intimate, very time consuming, one-on-one relationship, en masse.

For a moment, let’s take a step back and consider the specific value that each component of your “tech stack” adds to your value proposition to the client. In the most basic sense, if you only had one, or even ten clients, your need for supporting technology would be greatly reduced. Sure, you’d need to fire off a few emails, but you’d have time and capacity to make them highly personalised, maybe even handwritten, to show the intimacy of your relationship. Your ability to remember their birthdays could be run out of a hardcopy calendar (or your head) and you could literally figure out their financial plans with an HP10B calculator and a protractor. It seems like there is a direct correlation between the number of clients we need to service and the integration of technology in our practices.

I do wonder what came first though, the chicken or the egg. Did we first get the tech and then increase the number of clients we had, as it gave us the ability to scale our service offering? Or, did we always have plenty of clients, we just used to give them shittier service? I suspect it was the latter.

I do believe that clients have been getting better service as technology has slowly started seeping into the operational processes of our practices. We are able to keep better track of client portfolios; schedule more regular face-to-face meetings with them; send regular reports and so on. The thing that sticks out for me though, is that most of the tech we have integrated into our practices seems to be focused on making the back-office operations more “automated” and seamless. This did have an improvement for clients but I don’t believe it “revolutionised” their experience. They went from getting a report in the post every other year, to having one every other month. A new business application went down from three weeks to a couple of days and our ability to build a comprehensive plan reduced from two days to a couple of hours. No doubt there were improvements, just maybe we should’ve been doing those things anyway.

Thinking about the face-to-face, or the more intimate part of the overall experience, it feels to me like there has been very little change. In particular, the client engagement piece of our proposition has remained largely untouched. We still rely on the same discussion documents, visual aids, graphs and dashboards. Planners still struggle to get client’s to connect with their plans. We still struggle to get clients to understand and feel emotionally invested in the process.

I think this is in part due to where we have focused in our own practices – how we have introduced technology into them. My sense is that the “tech stack” that advisors have built in their practices has been focused on very operational and analytical outcomes. We’ve found it easy to justify the business case for change where automation, efficiency and scale are sitting in the driver’s seat. We find it less easy to find a space for technology that doesn’t fit into these categories, although confining ourselves to these categories creates a massive gap in the infrastructure required to deliver value to your clients.

I think we need to redefine the framework by which we evaluate whether our operations and “tech stack” adequately support the value proposition we want to put out to clients. As discussed in a previous article, successful financial planning must make an appeal to the client’s Heart, Head and their Hand. By “Hand”, I mean we must appeal to their orientation to take action; “Head” means the numbers need to stack up and make sense; and by “Heart”, I mean we have to make an emotional connection to bring all the elements together. So if you assess the tools in your practice, do you have supporting technology in each of these spaces? CRM tools will tick off the “Hand”; planning tools, the “Head” but what do you have for the “Heart”? How has your engagement process evolved with the advance in technology to help you to make better connections with the Heart, if at all? A major oversight in the propositions I see in the world today!

There’s a lot of pressure to “go digital”. It’s everywhere, from your relationship with your bank, or your supplier of dog food (Takealot for me), “digital” is poking its nose into every corner of our lives. At a minimum, consumers expect cataloguing on an app, uber-eats convenience and augmented reality business cards. Can present as some pretty anxiety-provoking stuff!

For Financial Planners, I get the sense there’s a level of fear around the thought. What does it mean to “go digital”? Does it have to come into the conversation between the planner and the client? What does that look like? Is it a whole bunch of fumbling around a complicated spreadsheet, with the client’s eyes on your fingers, feeling like an incompetent fool? That’s a terrifying thought, to tell you the truth.

“Digital” is a big concept that needs to be broken down so that we can understand what we’re talking about. Makes sense to think of “digital” over the list of activities that happen in a planner’s life. There’s stuff that happens together with the client for example, the face to face discussion. There’s stuff happening in the back-office, submissions, escalations, and analyses. Then there’s stuff that happens over the duration of having a relationship with the client, like communications and reporting.

There’s actually a whole bunch of “digital” that could be introduced into the practice that never actually touches the client. There’s equally “digital” that could be introduced into the actual relationship with the client. Simply moving from paper to email in ongoing communications is a good example of “digitising” one piece of your practice’s activity, your communications. Figuring out how an app might integrate into your engagement strategy is another version of digitising elements of your proposition.

I think we could prioritise the elements where digitisation would have maximum impact in the practice, weigh up the virtues of digitising one part of a planner’s activities over another. My sense is the most value to be gained from “digital” is to transform your face-to-face client experience. This is particularly effective if you do so in a way that tees up your operational processes for seamless efficiency. And this doesn’t mean clunky, highly complex spreadsheets to fumble around with for the client’s amusement. It doesn’t even mean sitting together with your clients crowding around a tablet or projected presentation necessarily.

What is does mean is having an artefact that can welcome your clients into the conversation. Could even be a piece of paper that brings everything together and intelligently represents the client’s life to invite conversation and transition easily, online, into your operational processes. The thing that makes it digital is not the “screen” that you use to present a graph or a picture, but rather the process by which data is captured, presented and recorded for your practice and your clients. It’s the way that you are able to take information from multiple different sources and arrange it in a way that builds enlightenment for your clients.

I think we need to start being less hung up on feeling like a chop in front of our clients and more focused on “digital” as a process surrounding the natural conversation that we’d like to be having with clients anyway. As long as “digitisation” makes that conversation easier and uplifts the way in which we gather, present, capture and record our advice, we’re starting to make the most of this wave of technology.

I don’t think it’s a provocative thing to say that the expectations clients have of their financial planning relationships is changing … dramatically! In every other aspect of their lives, clients shop around, looking for better and better experiences. There’s the obvious “new-age”, digital type stuff … the Netflixes and Spotifies that have created such intimate relationships with us that I seek their counsel more often than I do my wife’s. They’ve successfully lined up their service to connect so seamlessly with my expectations that the way I consume TV and music can never be the same again – mainlined, intravenous entertainment direct to my cortex.

Then there’s stuff which is less obvious but deeply engaging. My relationship with my dentist feels like it’s shifted from a begrudged, pain-filled gauntlet, to something that is quite cosmetically pleasing and surprisingly feel-goody in nature. I remember seeing the dentist, sparingly, and only for the sphincter-stiffening part of the experience – lying in anticipation of pain while he scratched around, searching hopefully for cavities and tender bits. Anything “extra”, like polishing your pearly whites, would’ve been “outsourced”, as a second appointment (!), to an “oral hygienist”.

Things have changed though, and so has my inclination to visit the dentist as well. I think they’ve realised that I’m more inclined to come to the dentist to be made to look pretty than I am to be put through the pain cave. It’s not so surprising to notice either that the nice part of the process is where great experiences are actually built. It seems that some clever folk deliberately went about increasing the nice parts of what dentists do and reducing the painful ones. In my most recent appointment, the horrible stuff was all taken care of by a quick 360 degree X-Ray machine from the future. The images were quickly cast up onto a flat screen for discussion between me and the dentist. Awesome! The aesthetically pleasing part of the process, the one making me handsome, was then embellished with a rigorous pedi for the teeth. Presto, I was on my bike with shiny whites before I knew it, thinking the dentist is actually quite a lekker oke!

These are not trivial changes. I can imagine dentists of the time fighting hard against changing their day-to-day activities, from “hardcore dentistry” like scratching around with a pokey stick, to “cleaning and polishing”. I can just imagine the resistance, taking on the job of the oral hygienist, recalibrating “what it means to be a dentist” in their heads. But the experience for me as a “patient/customer” is chalk and cheese. If the dentist that I go to is the only one doing this new approach, he’s going to have customers absolutely banging his door down.

To the point of my article, if dentists have been able to change their processes into a feel-good experience for their customers, it has got to be easier for Financial Planners. And in case we didn’t know it, clients are going to start looking around, especially if they feel happier coming out the dentists’ rooms than their Financial Planners’ offices.

What will it take to do this? Is your FNA the equivalent of a pokey stick? Is your Financial Plan akin to a dentistry bill? Do your clients feel like they have a bunch of spanners and pipes in their mouths when trying to tell us what they really deem to be really important in their lives? Is it more pain than pleasure in the dentist chair? Do we have an X-ray machine from the future in our offices? Are we killing our clients with admin, jargon, and stuff that makes us feel validated?

Change is hard. But change is coming. Clients are choosing dentists that make them feel better about themselves – not dentists that find holes. It’s time for Financial Planners to do the same as our dentist peers – look for spaces to increase the nice and reduce the shitty. With a few shifts in how we manage our client engagements, we can change things from “grudge purchase” to one that excites and engages.

If you are a Financial Planner looking to massively enhance your client experience, go here.

I often hear that “financial planning” is a great industry to be in because it helps you to build up a “passive income”. Investment planning, in particular, has this reputation. All it requires is a once-off sale and the advisor gets to charge an ongoing fee for as long as the “purchaser” remains “a client”. The thought alone, I find mildly offensive. It infers intent to charge fees in the absence of services rendered or value provided. It infers that the onus of responsibility lies on the part of the “purchaser” – they become “a client” for as long as they pay their premiums. That’s not the relationship I have in mind when thinking of myself as someone’s “client”.

What a business model though? See someone once, sell them a product and presto, you’ve just created an ongoing revenue stream for as long as that (poor) dude remains invested. Conventional wisdom goes on to cite this as a much more valuable business than one that requires consistent, ongoing, (once-off) purchases on the part of the individual – you know, the kind you’d expect from a proper “client”. I think the underlying thinking here is that the “passive income” seems more valuable, as the alternative constantly gives the “client” the opportunity to shop somewhere else, or stop shopping altogether. Personally, I’d prefer the option where the client is making ongoing, deliberate decisions to spend his money with me compared to earning fees that he actually doesn’t know he’s paying.

I’m surprised that this sentiment was strong enough to create a school of thought around “passive income”. Robert Kiyosaki must’ve had a hand to play in this? To think that it’s lasted long enough for people to build their business models around upfront services and ongoing revenues, seems clinically insane. The best businesses in the world are all predicated on creating ongoing, lifetime value for their clients. Every time I go to Woollies, I’m exercising my discretion to use them again, or not. It would seem though, that the value they give me at every interaction is so damn good, I just keep coming back. That’s a proper relationship.

As a “client”, that’s the kind of model I choose – one where I pay, in return for value received. If I’m paying, and I’m not receiving value, either I don’t know that I’m paying, or I don’t know that I’m paying. The “passive income” model can (surely?) only be successful a world where:

• Consumers are deliberately kept in the dark
• Knowledge and access to information is withheld by the providers
• Transparency and understanding is deliberately kept low
• Power is weighted toward the providers
• Options for alternative suppliers and products are limited

In Financial Services, I think the points above describe the industry ten years ago. The world we’re living in today has moved on. Relationships today are defined by an equal exchange of value. Advisors and product providers earn fees in return for the value they give to clients. No value, no fee. Might still be a bit of legacy stuff around, but as soon as clients realise that they’re paying for our services, they’re going to make an assessment of the value received and more than likely, shop around for something better.

It’s time for planners to stop and think really hard about the value for which they expect clients to pay. What do you expect that your clients find valuable? Is it your time? What does your time do for them? Is it your knowledge? What does your knowledge do for them? Is it your processes? Is it your offices, your systems, your relationships, your tools, your reports? And what does this do for your “clients”?

Only once these answers are crystal clear in our minds, do we earn the right to call people “clients”. “Passive” is the antithesis of “having clients”. “Having clients” means we’re constantly fighting to better understand and recreate our value proposition in a way that meets an evolving and increasingly nuanced set of needs and expectations.