Ever passed up a case because it looked like a whole lot of work for very little return? You kn...
Ever passed up a case because it looked like a whole lot of work for very little return? You know the type ' the client who doesn't know their Isa from their elbow and isn't sure they need an IFA anyway. You don't want to show them the door, but charity work won't pay the bills. What if there were a solution that kept them happy? Even better, it cost you nothing and even made them 10% more profitable? 'Financial coaching' might just be the answer.
In the US, where everyone has a fitness instructor, a therapist and a pet psychiatrist, financial coaching is the latest fast-growing fad.
Sadly, this might have coloured the view that traditional UK advisers have of financial coaching.
The British version is not about psycho-babble and blaming your parents' behaviour for your debt problems. It is a lot more practical and fills a glaring gap in the market. Most financial coaching companies, do not sell a single product and are therefore not regulated by the FSA. Instead, they focus on the softer side of money advice, the side that isn't very lucrative for advisers:
• Debt management
• General product advice
• Background and basic explanations of savings, investments and pensions
• Preparing clients to enter the product/investment world
A growing number of financial consulting clients have actually come from IFAs. Rather than seeing a threat to their own investment business, these advisers simply see it as a no-cost investment in existing and potential clients.
Their clients may want or feel the need to invest but, frankly, their finances are a mess and spare cash is swallowed by debt repayment. Others simply want to talk ' not something from which a regular adviser can earn an honest crust.
Tackling the whole learning process and counselling on individual issues takes time. And clients typically pay upwards of £45 per hour. Most recoup the cost through better money management within months.
When clients are more confident about their finances, they want to take charge and plan for the future. The moment they want to talk product, they go back to their original adviser, primed and perfectly able to understand investment product information.
This approach has been successful for some well-known IFA companies. Clients come back ready and willing to take control of their finances and know what they need. Intermediaries who have advised people who have seen a coach say it also saves them money.
One such adviser estimates coached clients need 10% to 20% less time having things explained, making each case potentially more profitable.
Financial coaching is a good, low cost add-on service. At a third of the price of a typical fee-charging adviser, many clients jump at the chance.
It may also be a future legal requirement. Much of the Government's and FSA's plans for developing advice centre on reaching more people with generic and low cost information. Even the Consumers' Association is on the act, calling for a national financial adviser network. Perhaps it's time you started a trend.
Visit the Wise Monkey Financial Coaching website at http://www.financial-coaching.co.uk
Simonne Gnessen, Founder of Wise Monkey Financial Coaching
‘Important to have an anchor’
Report to be written by TPR
Lack of innovation for solutions
Some 2,000 consumers affected