7 Hats Of The Professional Financial Planner

For many, a new year’s resolution is to get their finances in tip top shape.

For some, they will look to a financial adviser / planner to help them with making important decisions.

Decisions that could have a profound impact on their financial futures.

So, what is a financial adviser / planner for?  (we’ll use the term planner from here)

One view is that planners have unique insights into market direction that give their clients an advantage.

But of the many roles a professional planner should play, soothsayer is not one of them.

The truth is that no-one knows what will happen next in investment markets. And if anyone really did have a working crystal ball, it is unlikely they would be plying their trade as a planner, a broker, an analyst or a financial journalist.

Some folk may still think a planner’s role is to deliver them market-beating returns year after year.

Generally, those are the same people who believe good advice equates to making accurate forecasts.

But in reality, the value a professional planner brings is not dependent on the state of markets.

Indeed, their value can be even more evident when volatility (which we’re seeing plenty of at the moment), and emotions, are running high.

The best of this new breed play multiple and nuanced roles with their clients, beginning with the needs, risk appetites and circumstances of each individual and irrespective of what is going on in the world.

None of these roles involves making forecasts about markets or economies. Instead, the roles combine technical expertise with an understanding of how money issues intersect with the rest of people’s complex lives.

The 7 Hats

Indeed, there are at least seven hats a planner can wear to help clients without ever once having to look into a crystal ball:

1. The Expert: Now, more than ever, investors need planners who can provide client-centred expertise in assessing the state of their finances and developing risk-aware strategies to help them meet their goals
2. The Independent voice: The global financial turmoil of recent years demonstrated the value of an independent and objective voice in a world full of product pushers and salespeople
3. The Listener: The emotions triggered by financial uncertainty are real. A good planner will listen to clients’ fears, tease out the issues driving those feelings and provide practical long-term answers
4. The Teacher: Getting beyond the fear-and-flight phase often is just a matter of teaching investors about risk and return, diversification, the role of asset allocation and the virtue of discipline
5. The Architect: Once these lessons are understood, the planner becomes an architect, building a long-term wealth management strategy that matches each person’s risk appetites and lifetime goals
6. The Coach: Even when the strategy is in place, doubts and fears inevitably will arise. The planner at this point becomes a coach, reinforcing first principles and keeping the client on track
7. The Guardian: Beyond these experiences is a long-term role for the planner as a kind of lighthouse keeper, scanning the horizon for issues that may affect the client (such as pensions lifetime / annual allowance) and keeping them informed.

These are just seven valuable roles a planner can play in understanding and responding to clients’ whole-of-life needs that are a world away from the old notions of selling product off the shelf or making forecasts.

For instance, a person may first seek out a planner purely because of their role as an expert. But once those credentials are established, the main value of the planner in the client’s eyes may be as an independent voice.

Knowing the planner is independent, and not plugging product, can lead the client to trust the planner as a listener or a sounding board, as someone to whom they can share their greatest hopes and fears.

From this point, the listener can become the teacher, the architect, the coach and ultimately the guardian.

Just as people’s needs and circumstances change over time, so the nature of the advice service evolves.

These are all valuable roles in their own right and none is dependent on forces outside the control of the planner or client, such as the state of the investment markets or the point of the economic cycle.

Take Action

However you characterise these various roles, good financial advice / planning ultimately is defined by the patient building of a long-term relationship founded on the values of trust and independence and knowledge of each individual.

Now, how can you put a price on that?

If you’d value a no obligation second opinion with regards your future financial plans, feel free to contact us with the subject ‘Second Opinion’.