Dennis Hall: The human side of financial advice

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“I say this not in a braggadocious way: I’ve made billions and billions of dollars.” No, this is not a quote from Dr Evil but Donald Trump on his campaign trail. And if that is not bragging then I do not know what is. Frankly, it is quite distasteful but with American politics it is nearly always about the money.

Bragging and money are rarely far apart in my experience, as this publication’s letters page often shows. Barely a week goes by without someone being “slapped down” by someone else who has seemingly never put a foot wrong. It is a worrying trait in an adviser.

Clearly, there are some who believe advisers should not show any kind of money “weakness” in front of clients although I doubt this serves their clients well. A bit of humility would not  go amiss and clients appear to be more comfortable with advisers that can recognise mistakes and errors made in the past. The key is showing what has been learned from them.

Several years ago, I attended a course where the leader opened with a story about being “suckered” by a Ponzi scheme. She not only lost her own money but a lot of her relatives’ money too. They followed her advice because her PhD meant she was seen as the brains in the family. What surprised her in the years following was that, when she shared her experience, people became more trusting and actually sought her out for advice.

I have subsequently experimented with ways of sharing my own money foibles as a means of putting people at ease. In the initial client meeting I explain that while qualifications and experience suggest I know and understand much of the theory, in real life I have money weaknesses too.

Sometimes, I will buy a piece of art instead of funding my pension, for example. To prevent this becoming a regular occurrence I have constructed an elaborate system of money management, which basically entails giving everything to my wife.

I often get a laugh when I tell that story and I notice clients visibly relaxing. What I believe I am doing is demonstrating the fact I am human, too, that even financial advisers fall off the rails when it comes to financial planning.

I am also showing that I am aware of my weaknesses and have created systems to deal with them: acting more responsibly, perhaps. It enables a more honest conversation around money, our weaknesses and how to deal with them.

People do not want to be lectured to; they do not even want to be educated. They come to us for advice and many are petrified they will be chastised for previous decisions and mistakes, which means they will probably hide them from you.

In a world where robo-advice is quickly gathering pace, perhaps by being more human we can deliver a better experience.

Dennis Hall is managing director of Yellowtail Financial Planning