Mr Mota, who is the general manager of distribution at IOOF, pointed to IOOF research that found 76 per cent of clients rated ‘achieving core goals and lifestyle objectives’ as the definition of a successful ongoing financial planning experience.
But when clients were asked what they thought they were paying for, only 13 per cent of respondents listed ‘strategic advice or ongoing coaching’.
Sixty-five per cent of clients said they were paying for ‘advising, managing and adminstering investments/superannuation’ – a figure that rises to 77 per cent if ‘advising and managing insurance’ is included.
Mr Mota said the financial planning industry has spent so much time, education and energy in developing the skills of financial coaching that it has “lost sight of the objective”.
“We coach our clients through issues of risk and reward, taxation, estate planning, portfolio construction, et cetera … but are they at the heart of our clients’ lives or objectives?” Mr Mota asked.
“One takeaway from this is that business models should offer tangible benefits and information over and beyond the quantitative measures of product, price and performance metrics,” he said.
“So it would seem that client satisfaction and therefore value for money is less likely to be driven by portfolio performance, tax effectiveness of investments or even risk-adjusted return – which over time can be good or bad. Far more important is the client’s objectives,” Mr Mota said.
If Renato is correct then the notion of scaled advice is doomed. Holistic planning implementing strategy is the only means of delivering advice. Timely reviews implementing ‘adjustments” maintain the strategy. Education or coaching is paramount in any planning relationship. Restating the obvious I believe but more importantly I’d like to think that a higher percentage of planners are outcome based in their approach. The basis of planning is meeting goals, or did I miss something?