Financial advice should aim to generate a better Return on Life (ROL) for clients.
Does it seem that some of your clients, despite getting the right investment advice, are not translating financial success into the lives they really want?
Not enough cash to do what they’d really like? Dreams way off over the horizon and not getting any closer?
Mitch Anthony, a leading exponent of personal finance education and life planning, and a mentor for many advisers and financial professionals, calls this a poor ‘return on life’.
People may receive sound investment and financial advice but still fail to use their financial gains to fund the life – and the lifestyle – they want. The numbers on the statements look good enough but they haven’t planned or managed their wealth to enjoy all the fruits of it.
Many of the joys and freedoms people wish to enjoy are hampered by lack of cash flow, for instance.
Does this sound familiar?
If so, then Mitch Anthony has some great ideas to improve the returns that clients get. He highlights six areas of value that should be incorporated into financial planning advice.
There are, of course, challenges that advisers face that inhibit being able to cover all the key areas – and these are detailed below.
But at the same time, this doesn’t preclude the possibility of partnering with cash management advisers and financial planners who can bring these qualities to the table.
At first glance, the six qualities may seem rather basic. But scratch away the surface and we see that they really are the keys to improving the lives of people who have never quite got to grips with their finances – or translated their successes into real-life benefits.
The key challenges for financial advisers
Before we get into Mitch Anthony’s points, it’s worth considering some of the key challenges faced by financial advisers.
The following factors may be partly responsible for not always achieving the great ‘return on life’ that clients aspire to:
With an appreciation of these challenges, let’s get into the six pillars of financial planning that can bring more value and ‘return on life’ for clients.
Mitch Anthony’s six core values of effective financial planning
Below is a brief overview of each of the core values, as detailed by Mitch Anthony:
While these terms are not complicated, they are all focused on bringing something of real value to the relationship; rather than simply interpreting numbers and devising a financial plan.
These qualities should underpin any agreement for wealth management or financial planning services with clients.
Delivering on these core values
If you can go through the above six areas, nod, and say that you are delivering on all these fronts, you’re doing a great job for your clients. They should be generating a great ROL!
But our bet is that most financial and investment advisers are unable to focus their attention on much beyond the numbers. However detailed the analysis is and however impressive the numbers are, this doesn’t always translate into the lifestyle that clients dream of.
To take this next step requires an understanding of the client’s goals beyond purely return on investment; these are a little tougher to measure and quantify than the pure numbers – and not all advisers are well equipped to focus on them. It also requires digging a little deeper than the big picture to really understand the barriers and assist clients to work through the micro factors that are hindering the macro progress.
Clients who partner with planners for whom focusing on these areas is part of their modus operandi will see their investment success translate to a better ‘return on life’ too.
Stephen Mitchell is business development manager at Bill Butler.
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