Added extras or part of the service offering?

Two articles recently caught my attention. The first commented upon the commission mortgage advisers could be missing out on due to their not reviewing the adequacy of their clients’ home insurance. The second was a report on the Equity Release Council’s white paper, ‘Equity Release Rebooted: The Future of Housing Equity as Retirement Income’, in which it was stated that some equity release advisers need to refresh their soft skills.

Related topics:  Finance News
Bob Champion
25th May 2017
Bob Champion LLA Later Life Academy
"Some clients do not tell their financial adviser everything. Either they do not consider it relevant or they want to keep that ISA for themselves as their own plaything."

These articles took me back many years when, after cutting my hair, a barber might come out with the immortal words, ‘Something for the weekend, Sir?’ He could in no time increase the value to him of my custom by selling an added extra, or two, to his core offering.

Looking at the two articles there are clearly two different approaches at play here. One is about advisers missing out on the margin from offering added extras. The other is about the quality of the service offering. Both lead to increased income for the adviser, it’s the approach that is different.

The former article reminds me of Auntie Wainwright from, ‘Last of the Summer Wine’. She had the reputation that no one left her shop without buying something they did not really want. So much so that people avoided entering her shop. In search of the profit from a quick sale, Auntie Wainwright would not give any consideration to whether she wanted to see the customer again.

To provide the best financial advice we need to fully understand our customers. We also want them to be happy with the service they receive so that they continue to use our services and more importantly give personal recommendations. John Cridland in his review of state pension age talks of a mid-life financial MOT before individuals undertake the final stages of their working lives and the run down into retirement begins. This, in my view, is a laudable suggestion.

A financial MOT involves looking at the individual in the round. There are two aspects to financial planning: how to help clients achieve their hopes and dreams? And how to mitigate the effects of those eventualities that could turn those dreams into nightmares?  In this context I include death and incapacity.

What better time to carry out such an MOT than when planning retirement income. The MOT would include such things as what dependants would live off should premature death occur and it could ensure answers are found to questions such as:

•    Are wills in place?
•    Are pension nomination forms up to date?
•    Has sufficient thought been given to the possibility of either the client or their partner going into care?
•    Are Powers of Attorney in place?

In a very true sense, it is the conversation that is important. This is where the soft skills come in. The adviser is unlike the barber of old. They are not looking for a further sale, they are looking to understand and help their client.

In approaching this, we have to be acutely aware that there are fact finds and there are fact finds. A regulatory fact find analyses what the client has, what they want and their attitudes. The fact find that derives from a financial MOT would deliver to the client a report covering their financial wellbeing. It would list for example:

•    Items that need urgent attention.
•    Items that can be lived with but will need eventual attention.
•    Those items that are in a satisfactory condition.  

Some clients do not tell their financial adviser everything. Either they do not consider it relevant or they want to keep that ISA for themselves as their own plaything.

Here are where the soft skills of an adviser are vital; they will allow the adviser to carry out the MOT which will identify more about the client than a regulatory fact find and identify more financial services that are required than just appropriate financial products. Will writing, powers of attorney, critical illness, cover care planning, and possibly funeral plans may be identified from the conversation as things the client should be considering. By introducing the client to appropriate service providers a value added service may be added which clients could be grateful for.
 
Maybe Cridland has done more than carry out an independent review of state pension age for the Government. He may have introduced a new role for financial advisers. If the financial MOT does take off, who is best qualified to carry it out if not a financial adviser? Time therefore to brush off those soft skills?

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