Expert: Rob Harradine, Ammonite
Headlines:
- Cashflow modelling is deemed revolutionary for the IFA industry and this is a component of helping clients understand if they are on track to reach goals and play scenarios through around various goals
- Clients that go through goals-based planning are far more likely to make referrals
- Goals-based planning means that the conversation with clients doesn’t have to be pegged all the time to market / portfolio performance
Discussion points:
The room felt that unfortunately only about 20% of IFAs are engaging in goals-based financial planning. They would love to see this number increase. They feel amongst the adviser community it is more predominately the younger advisers that are pushing for a goals-based approach.
Advisers don’t want to be beholden to one software provider for everything (instead have software providers that integrate to all and give the adviser the option to switch on and off software providers).
Clients that go through goals-based planning are far more likely to make referrals – this is because the client is having such a WOW moment and enjoying the process / relationship and deriving VALUE from the experience. In the USA they have goal-based planning built in much more to the financial adviser processes.
Goals-based planning means that the conversation with clients doesn’t have to be pegged all the time to market / portfolio performance. Indeed, advisers may even shy away from reaching out to clients if markets have dipped. By focusing on whether goals are on track to be achieved, this prevents the focus (and adviser value) always being related to investment performance.
Stochastic modelling software and goal tracking software makes the client experience more engaging.
The main difference between cashflow planning and goals-based planning was perceived as cash flow planning being used for clients at decumulation stage, whereas the goals-based planning is more about initial goals setting and tracking goals over the journey.
Key takeaways:
- Advisers and clients would benefit from adopting goals-based financial planning approach – we should do it more in the UK (indeed USA / EU do adopt this approach much more than we do)
- Feeling that there will be huge flood of clients demanding the goals-based financial planning approach in the near future. IFAs who have not adopted this process will get left behind
- Goals-Based Planning evidences more value to clients (a better client experience). This equates to more referrals for the adviser
