Generating ROL

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:

• Advisers can quickly get bogged down with the ‘small stuff’ as they try to establish a systemised approach to generating investment profits;
• Advisers easily get busy and must remain focused on core growth-aligned activities;
• Cash flow management services have their own ‘glass ceiling’ for growth with staffing levels and economic viability some of the key barriers;
• Advisers may particularly struggle to provide cash flow management services because they cannot profitably scale administration and client engagement; and
• No matter how client-focused they intend to be, they are restricted in how much they can really do because they have to look after the numbers.

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:

1. Organisation
   Being able to introduce order into the financial life of clients is a key value: this includes the large-scale finance such as estates and taxes and the smaller scale household finances.
2. Accountability
   Clients being able to deliver on financial commitments is only possible if you can help them prioritise financial goals and take the necessary action. Advisers must demonstrate the steps and then monitor progress.
3. Objectivity
   Your insight must help clients avoid emotionally driven decisions; you must be available to research and ensure clients have all necessary information, while also disclosing any potential conflicts of interest.
4. Proactivity
   Be proactive in helping clients anticipate life transitions and be financially prepared for them; this requires understanding your client’s lives and creating an action plan to meet and accommodate potential changes.
5. Education
   Understand what specific knowledge is required for success by first understanding your client’s unique situation; then facilitating informed decisions by providing access to the right resources and explaining the relevant options and risks.
6. Partnership
   Treat the arrangement as a partnership aimed at facilitating the best life possible. This entails working with clients not just for them, involving a full understanding of client background, philosophy, needs and objectives. 

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.