10 challenges you'll face developing a financial planning and coaching model for a fee-for-service

So you want to move away from being a distributor of insurance and investment products, to being a financial planner and coach.

And you want to embrace the shift from a commission-for-sales model, to a fee-for-service model.

Hold on there Kemosabe.

What you're about to embark on is totally doable, but isn't easy, and you'll bump up against some significant challenges along the way, some of which might completely derail your efforts, so it's best to know about them now.

So here are 10 challenges you'll likely have to confront.

#1 - Doubting your original motivation

Once you've decided this transformation is the way to go, 'Implementation discomfort' will follow and when the rest of the challenges on this list show up, there's a good chance you'll have your head in your hands at some point, thinking: "It seemed like such a good idea at the time, why am I doing this to myself?".

Well, why did you want to do this in the first place?

What was the motivation? Is it still the motivation? Because if that motivation isn't pulling you strongly enough, there's a fair chance that you'll bail out when you confront these other challenges.

#2 - Being Overwhelmed

It's a journey that takes a lot of time, energy and work. It isn't a quick fix. The journey to financial planning and coaching conversations, and moving from commission-for-sales to a fee-for-service is more involved than just continuing to do what you're currently doing, and replacing a commission payment with a fee payment.

You're likely going to need to commit time to changing what you actually do, and (re)learning how to adopt new thinking, conversations and processes. The overwhelm comes from the 'elephant' being so big, and trying to do too many things whilst there are other demands on your time. It's probably a 3 year journey for most financial advisers.

#3 - Operating in a culturally different environment

If the organisation you work for doesn't 'get it' or the bosses and colleagues you're surrounded by don't 'get it' then you're likely going to find yourself in a vulnerable situation where there's pressure to follow the well-trodden path of product/investment conversations and sales.

You're going to need to do this in a culturally supportive environment, where everyone is trying to achieve the same kind of outcome. If the environment you're working in isn't really supporting a culture of planning and coaching it's going to be tough to keep moving forward.

#4 - Feeling the pressure to make money

You have a family and you need to pay the bills. Maybe you have financial and sales targets too, or it may be that you just don't want to see revenue go backwards. Who does?

Delivering a financial planning and coaching experience adds increased value to what you do and increased value will be worth a lot more commercially. When and how that shows up depends on where you're currently at, and how long it takes to confidently implement a new model.

It probably won't happen immediately (although it can) and if there's pressure to make money, there'll be pressure to go back to doing what you already know how to do.

#5 - Reverting to old habits

Old habits die hard. When things get tough - as they will - that little voice in your head will try to persuade you that familiar and easy paths look really attractive.

But they won't lead to change because you'll still be doing the same thing. It's like riding two surfboards at the same time. At some point, you need to get on one board or the other, otherwise you don't ride either and you fall in the sea.

#6 - Lacking confidence

If you've never done something before, then you probably won't be confident about your ability to do it and that's deeply uncomfortable for most people. What was it like when you first learned to drive a car? The first time I ever dropped the F-bomb in front of my mother was when she was teaching me drive.

Dan Sullivan at Strategic Coach says confidence comes at the end of 4 steps:

1. Commitment (to doing stuff you don't know how to do)
2. Courage (because it will get shitty)
3. Capability (learning to do new things)
4. Confidence (that you actually know what you're doing)

Lacking confidence when you don't know how to do something new is normal, but that doesn't make it any less uncomfortable. Commit, take courage and pour yourself a stiff drink every now and then.

#7 - Communicating to clients what's different

Also known as articulating your value proposition, this is going to be a struggle for most people on the journey. Clients don't understand what we do now, so aren't going to fully appreciate the fact that you've changed from being a distributor of stuff to being a financial planner or a financial coach. They probably don't know what a plan is or why they should have one, they don't usually show up with the lifetime goals the profession suggests they should, and they certainly don't think they have any need for a coach, or some kind of financial psychotherapist.

Communicating what you're up to and why, without sounding weird or 'woo-woo' is a key challenge that few of us had to really bother with when advice was 'free'. Now it's crucial.

#8 - Struggling to find the right clients to have the conversation with

Most financial advisers seem to be looking for new clients, and many of us are using the same old tired language to try and attract people.

It's hard enough to find clients to speak to a financial adviser without trying to market something as fluffy as planning and coaching.

You're going to need to approach marketing a bit differently. You'll need to start thinking about what your ideal clients are really going through, what makes them ideal for you and what problems you're really solving.

#9 - Struggling to let go of unprofitable or undesirable clients you already have

We've been persuaded that every client is there to be won, and once we've got them, they are a client to be retained, even if the relationship doesn't work, they drain our energy, or we don't make enough (or any!) money to pay for what we do.

If you've been in the industry for any length of time, and you've amassed a 'book' of clients, then you'll come to realise that delivering a great financial planning proposition profitably is going to require that you limit the number of clients you can have,

When the time comes to decide how to manage that situation you're probably going to feel very uncomfortable about 'losing' clients and you might not appreciate what you're 'gaining'. You will find a ton of reasons to retain every client and usually it comes down to a fear of letting go of a small amount of money, a relationship that isn't as good as you think it is, or the future opportunity when the client makes it big and you finally get to see the rewards.

It can take planners years of hair-pulling-frustration before they finally come to terms with the brutal reality.

#10 - Compliance doesn't seem to fit very well

Compliance officers are there to keep you on the straight and narrow path, and keep you out of trouble. They exist, as does the regulator and the industry, in a regulatory framework of product distribution.

Financial planning and coaching isn't a regulated activity, and when we separate it from intermediation of products, you'll discover that it doesn't sit very comfortably in the compliance boxes that compliance people want ticking. It's quite likely that compliance people won't really understand what you're trying to achieve with clients.

When we throw the compliance 'kitchen sink' at clients it causes challenges with the client experience. In fact, if it's done well and your compliance people are willing to see things outside of their normal regulatory frame of reference, a financial planning and coaching methodology will enhance your compliance outcomes.

Still sure you want to go on the journey?

So there we go. These are ten common challenges that show up when developing a planning and coaching proposition on a fee-for-service model.

The answer to this question, and all of the challenges above, lies in your motivation for why you're doing this in the first place.

Good luck.