by Carl Roberts
Financial advisers use to earn their fee by the time spent analysing a client's existing investments and researching new ones. Whilst this work is still vital, it is now the art of great questioning that can be so much more powerful for both adviser and client. But how do advisers get to these questions?
When a client meets with an adviser for the first time there is a tendency for them to only provide the information that they feel is relevant to their particular problem. I believe the main reason for this is a lack of trust of the client's end. Apart from a doctor/patient relationship I can't think of many other professions where a client will need to provide such personal information to someone.
When a client/adviser relationship is new, that level of trust just isn't there yet. The client may feel uncomfortable delving into areas of their life and providing information that they hadn't prepared themselves for. Unfortunately, without the bigger picture financial planning recommendations can be seriously flawed.
For example, Just the other day I saw a client who had all the information on how much he had personally contributed to pensions but didn't realise that I needed to know details of the employer contributions too. He just wasn't aware that employer contributions formed part of the annual allowance calculations.
He became a little worried when I explained that when factoring the employer contributions, the total amount of contributions he had made was over the annual allowance. Luckily, he had plenty of carry forward to use.
The tapered annual allowance rules have made it more complex still and I find some clients do not always share their income from other sources. Things like:
Not knowing all the information needed to carry out a pension annual allowance calculation and then getting it wrong could lead to a serious tax bill for a client.
There is no quick way of getting more out a client who is not yet prepared to give it.
There are four key ways we can make the process easier for clients:
It takes time to earn and that should be a financial advisers biggest objectives in the initial stages of a relationship. Even now I am still finding out the odd soft facts about clients I have dealt with for years.
Going through a standard questionnaire and reading out a question is not going to cut it. We need to be explaining (without using jargon) why we need certain information.
Allow the client to provide information to you in a way they are more comfortable with, be it a conversation with you or filling out a fact-finding sheet on their own time.
You could even experiment with one of the money apps that allow a client to link all their accounts to one app and provide you with read only access. This can be more accurate than a conversation as nothing will be hidden.
Give examples of other clients you have worked with and how they prefer to give all the information. And show the dangers of an adviser not having all the pertinent information.
I've said how important it is to extract the necessary data from a client, but don't forget the soft facts either. Understanding this information and organising a desired lifestyle for a client is where a financial adviser can really prove their worth.
Carl Roberts is a Managing Director and Chartered Financial Planner at RTS Financial Planning.
