Lazy Financial Planner Causes Death of Client

I’ve been getting into a few scraps with other advisers recently. Particularly about their misuse of the title ‘Financial Planner’ and ‘Financial Planning’.

So I thought I’d better explain why I’m so passionate about this.

This might explain my (often outspoken) frustration with the financial services ‘industry’. In particular, it might explain my criticism of financial advisers and ‘financial planners’ who completely miss the point of their existence.

Twenty years ago, when I was still advising, the following experience had a profound effect on me. (This is covered in more detail in my book, Enough? but I share it here as a call to arms for REAL financial planners everywhere.)

How a financial adviser seriously failed his clients...

John and Margaret were referred to me by one of their closest friends, a client of mine. John had recently been diagnosed with a terminal illness. It was clear that John’s main priority was to know that Margaret was going to be financially secure after he died. Quite simply, he wanted to know that everything was in order and that she would have ‘enough’.

At our meeting, they passed me a document prepared a few years earlier by their existing adviser.

?? THIS IS IMPORTANT: He was a highly qualified ‘Financial Planner’. There was a list of his many qualifications both on his business card and on the front cover of the document - CFP? FPFS, etc, etc.

Here’s the thing…

This document was entitled ‘Financial Plan for John and Margaret’.

As I glanced through the document I could see that this ‘Financial Planner’ hadn’t produced a financial plan at all. It was simply a report containing a schedule of existing investments - and, you’ve guessed it - recommendations for more investments.

He must have spent hours researching funds. He’d made recommendations that matched their ‘supposed’ risk profile. He’d produced a beautifully bound report to document his recommendations - and he’d then gone ahead, switched, and reinvested John and Margaret’s money into various investment accounts. He had done all of this professionally and in a timely fashion.

“So, where’s the problem?”

Here's what he DIDN’T do...

He didn’t ask the right questions.

All the ‘Financial Planner’ had done was what he assumed John and Margaret wanted him to do, i.e. advise on an investment.

NOTE: They didn’t ask for a ‘financial plan’. Why would they?

So, regardless of his job title, and all his ‘financial planning’ qualifications, he hadn’t done ANY financial planning.

Sadly, because he had asked all the wrong questions, he did not get to know what John and Margaret REALLY wanted. He arranged their investment account, sure. But he failed to identify something really important: that at that time, both John and Margaret were stressed out, working in jobs they no longer enjoyed.

The fact is, he wasn’t particularly interested in John and Margaret. He was only interested in the money that was available to invest.

So, he hadn't asked the right questions. He hadn’t bothered to find out about their REAL goals and objectives; about their doubts and fears, worries and concerns.

John and Margaret were in good health at the time they dealt with that 'financial planner'. He didn't find out what they wanted out of life. He didn’t find out what they wanted to do MORE of (i.e. travel) and what they wanted to do LESS of (i.e. work they disliked so much!) He didn't identify the cost of their current and future DESIRED lifestyle. He didn't crunch any numbers. And he certainly didn’t create a meaningful financial plan. In short, he didn’t help John and Margaret understand what was going to happen to their bucket!

Here's what I discovered in my Lifestyle Financial Planning process...

Firstly, Margaret was going to be OK. In fact. she was going to be more than OK. She was going to be totally financially secure for the rest of her life. And now they both knew that. John could rest in peace.

But here's what I also found.

When I was crunching all the numbers (using Prestwood / Truth Software) and using very prudent assumptions - and allowing for a long life expectancy for planning purposes - I found that John and Margaret could have retired THREE YEARS AGO, (i.e. at the time they were working with that 'Financial Planner') and could have lived a good life without fear of ever running out of money - even if John lived a long life!

They could have both left the jobs they hated so much - THREE YEARS AGO!

At that time, John and Margaret were what I call ‘Just Right’ clients. Back then, taking into account ALL assets and future income streams, they would have just about the right amount of money for the rest of their life. They would have ‘enough’! But the problem was - like so many people - they didn't know that!

Worse though, the ‘Financial Planner’ hadn't bothered to even find out.

Quite simply, he’d failed to tell his clients what I call ‘The Truth About Money’.

Sadly, three years later from the date of that 'financial plan', John - still stressed and working full-time in a job he hated? - found out he had a brain tumour... and just six months to live.

(That’s when I had turned up... too late!)

Tragically, if John had met with a REAL Financial Planner (rather than just a traditional product-focused adviser masquerading as a financial planner) he may have decided upon early retirement. He could have avoided the stresses and strains that came with his job - and his health may not have suffered as it did.

Here’s the thing...

At the time, both John and Margaret regarded the service they received from that (ahem) ’Financial Planner’ as acceptable. They told me they were happy with the advice they had received. After all, they knew no different - until now - when it was too late!

Their ‘Financial Planner’ had broken no rules, he had facilitated the purchase of a product that he assumed his clients wanted. He’d ticked all the boxes for his compliance department and for the FSA (now FCA).

The clients didn't ask for either 'financial planning', a 'comprehensive financial plan', or a 'Lifestyle Financial Plan'. (Again, why on earth would they?)

Lazy? Or just misguided?

The Financial Planner wasn't lazy, as such. Just misguided. Unfortunately, he had been trained by 'the industry' to focus on the money and mainly do what 'the industry' wanted - distribute financial products and investments.

Regardless of his technical qualifications, he didn't have the mindset of a REAL financial planner.

He didn't realise his true purpose - to help clients get a BETTER LIFE, not just a better return.

He had failed to realise the importance of REAL financial planning, of helping his clients understand what they need to know most: are they going to be OK? Will they have ‘enough?’ and the big one - what’s going to happen to their bucket?

Had he done so, John might still be with us today.

I believe the ‘Financial Planner’ concerned seriously failed his client.

What do you think?

When I discovered that this client could have retired years earlier, can you imagine how angry I felt at that time? (These clients NEVER did stuff they could have done! And now it's too late.)

Can you see why I am so frustrated by ‘financial planners’ who don’t do real LIFE CENTRED financial planning? (which of course MUST incorporate meaningful lifetime cashflow modeling based on prudent assumptions!)

Can you see why I get angry when so-called ‘financial planners’ say they only do this ‘when the client asks for it’ or ‘if they want to pay for it’, etc?

Or, they only do a lifetime cashflow at the outset (to justify a product/sale/recommendation).

Sorry. But that is complete and utter bollocks!

Are they professional Financial Planners or not?

Here's what I think...

?? ...and THIS is how you differentiate yourself and attract all the wonderful clients you can ever handle... ??

IF YOU ARE A REAL FINANCIAL PLANNER, EVERY CLIENT DESERVES TO KNOW "THE TRUTH ABOUT MONEY". PERIOD.

If you're a REAL financial planner, that's what you do. There are no excuses.

When this penny drops you WILL succeed at a higher level... you WILL stand out from the crowd... you WILL attract more of the RIGHT clients... you WILL be worth the increased fees you are paid. Quite simply, the Universe will help you succeed - because it knows what you stand for!

What do you think?

Only when clients EXPERIENCE real financial planning will they ‘get it’.

Your job, as a REAL financial planner, is to get skilled at helping them EXPERIENCE it.

Then deliver it, to every client, every time. No excuses.

You have a responsibility to do so.

After all, REAL financial planning changes lives.

No...!

There's something far more important…

REAL financial planning saves lives!

So a big shout out to all my haters, many still masquerading as ‘financial planners’, but NOT doing REAL financial planning for every client, every time. You know who you are. ??

I know, for sure, that they will have some clients just like ‘John and Margaret’.

They will be failing those clients.

The question is, what about YOU?

And what are YOU going to do about it?

BLATANT ADVERTISEMENT: If you want to 'up your game' and really 'GET' Lifestyle Financial Planning; if you want to get your MOJO back, if you want to find your true purpose, and get re-inspired about the work you do, then come on board with Inspiring Advisers. Over the years it's helped a fair few advisers change their client's lives for the better.