I cannot remember how long it took me to switch from actively managed funds to passive ones. Nor do I recall the time it took to incorporate lifetime cash flow modelling and then lifestyle financial planning. It could have been months, if not years, and I still have situations where my beliefs are challenged.
I mention this because I meet many advisers who have also reached their own conclusions regarding the best way to do things. My guess is they have reached those conclusions over a period of time and maybe even changed their minds along the way. So far so good – that is evolution.
These beliefs become incorporated into our businesses and, with our commercial heads on, we make our proposition repeatable, scalable and as low cost as we can. Ideally we will template everything we do, even the client experience. Having spent a lot of time developing our beliefs, we waste no time systemising them.
A problem, however, is that the people we are offering our services to will often find their own belief system challenged by us. The public have often been on a different learning curve to us: they get their financial information from the weekend press. Need I say more? If we tell them something they are not expecting it will be challenging.
I was reminded of this recently when meeting someone for the first time. He had already seen a couple of other well respected advisers in the area (people I considered at the top of their game) but felt they were so wedded to their investment philosophy and processes there was no room for him to explore his own ideas.
He did not buy into everything he was told and wanted to explore how one strategy might work alongside another. But his overarching impression was that it would be the adviser’s way or the highway – there was no middle ground. With a portfolio of cash and investments amounting to about £20m I figured there was probably room for a lot of middle ground.
I mentioned that our core philosophy was not dissimilar to what he would have heard from the other firms he had seen but we also had clients who wanted alternatives that we assisted with. We agreed to talk some more, initially paid on a time basis, until we work out a way forward, an option he had not previously been offered.
I have found on many occasions that people need enough time and space to come round to what is being suggested. There have been clients vehemently opposed to the “touchy feely” life planning approach but who, a few years later, become raging advocates. Then there have been others who want to self-manage funds for a while before finally throwing in the towel and giving us the mandate.
Sometimes we need to remember that we reached our conclusions over a number of years and so it is probably wrong to expect people to get there after an hour’s meeting.
Dennis Hall is managing director at Yellowtail Financial Planning