While money is the most pressing problem to all our clients, it’s surprising how few Australians are engaged in the financial advice industry. How can the same industry devoted to helping people make sound decisions around money turn everyone off so much?
I believe value has a lot to do with it.
Australians do genuinely value financial products such as superannuation, bank accounts, shares, and property.
But advice is different to financial products – just as drugs from a pharmacy are different to medical advice from a GP. With valuable advice being treated as just another off-the-shelf financial product, I believe most Australians do not value, understand, appreciate, or actively seek out genuine financial advice.
Take a typical ‘off the street’ client.
Let’s call her Emma. She doesn't like talking about money issues, especially with anyone outside her immediate family, and she particularly doesn’t like talking to financial planners or accountants. For Emma, talking about superannuation, taxation, and savings plans create feelings of being exposed and feeling inadequate. We’ve all met an Emma in our line of work!
When the mainstream financial advice industry makes most of its money from products (rather than delivering meaningful advice), it’s easy to understand where Emma gets her outlook from. When you see that the bulk of the industry is paid not to give advice – but to deliver or maintain products packaged as ‘advice’ – then you start to perceive the magnitude of the problem for our clients.
In medical terms, it’s the drug industry portraying itself as a medical profession. No question the drugs are important. But only in context of advice from a trusted, conflict-free, product-free, services-free medical professional.
Despite the importance of money in our lives, it’s no wonder so few of us are engaged with financial planners, accountants, and other advisers about our financials.
So how do we take a ‘new advice approach’?
For many people like Emma, the discussions most advisers have about money just don’t work. They start out wrong – with turgid, boring explanations of superannuation, insurance, and all the things she’s been avoiding talking about.
How should they start?
How about with more meaning? How about something that Emma actually cares about that might require money, or advice or planning?
Good advice is already hard to value. And our money discussions must work better than what's served up by a lot of mainstream advisers today. If your money discussions aren’t really meaningful for people like Emma, consider what it means for your advice firm.
I predict people like her are going to go out and find someone who can make their financial meetings work better.