Asking a client what they would do if they knew the date of their death could soon form part of an advisers' fact-find interview, according to IFA firm Lighthouse Group.
Andy Gadd, head of research at the company, says the questions form the basis of holistic planning, a growing trend in the US, which involves advisers asking not only about a client’s financial plans but also about their hopes and values.
He says advances in technology will free up time for IFAs to focus on this “more human side” of financial planning and adds the emergence of wraps and fund supermarkets in the UK could require advisers to learn the skills required for holistic advice.
“There is continuing pressure for financial advisers to evolve from their historic role as product salespeople to become more relationship-centred and holistic planning fits in with this move,” he says.
“As the technological tools available to financial planners improve, time will be freed for financial planners to focus on what might be described as the more human side of financial planning.
“Holistic planning may also be of particular relevance with the introduction of wrap propositions into the UK. The introduction of wraps might see business models changed so that independent financial advisers decide to provide advice from the whole market place range of investments, perhaps predominantly on a fee-based basis. For those that go down the fee-based route they will need to provide increasingly complex and in-depth advice and perhaps learn new skills such [those required for] as a holistic approach.”
Currently, Gadd says, fact-find interviews are based only on a client’s financial needs – whether it is paying for a wedding, saving for their children’s futures, or retiring early - before ascertaining a risk profile.
But, he says, their focus on holistic planning means the financial planning process and advice is no longer separated from the rest of an individual’s life. The attention, he says, is focused not only on money but on the client – on his or her hopes, values, questions and concerns regarding their money and their life.
“A traditional financial planner would focus on assets and income and would make assumptions,” he says. “A traditional planner might, for example, ask when a client wants to retire but wouldn’t ask the client about how he/she sees their needs changing over their working life and what his or her goals are. Retiring may not be one of the client’s goals.”
He says holistic planning includes a whole different range of questions, such as: “You have gone to your doctor and he tells you that unfortunately you will be dead within 24 hours. Ask yourself: “What feelings am I experiencing? What regrets, what longings, what deep unfulfilled dreams? What do I wish I had completed, done in this life that is just about to end?”
Among other questions are:
- How would you choose to live if you had all of the money that you needed?;
- What would you do if you only had a few years to live?, and
- What would you do if you knew the date on which you were due to die?
Gadd adds: “This, of course, all sounds a bit morbid but the objective of a holistic planner is that rather than talking about financial goals and objectives the discussion tackles how the client sees their life developing, what attitude their parents had to money and what their dreams are.
“I believe holistic planning is potentially more mentally and financially rewarding for financial advisers themselves and should lead to longer term relationships with clients.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Scott Sinclair on 020 7034 2636 or email [email protected]IFAonline
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