No, not rugby fans and all the rest. Not as important as that.
Financial services is a massive business. It encompasses the Industry of managing risk and money, and the profession of giving advice. But we hear the words ‘industry and profession’ used interchangeably.
So we need to know who is doing what. And actually, that proves to be fairly simple. As I said, two types of people.
There are the ones for whom the money is actually the client. That’s what they do. Manage the money, in one format or another. So the clients real role is to bring it to the table.
That sounds harsh, but the fact is that if you look at the language and systems involved, it’s all about the money:
- They ‘Review Portfolios’
- They use risk assessment tools that feed straight into funds
- The clients objectives are ‘to achieve capital growth’
As I said, it’s all about the money. In fact, they work in what I can only describe as ‘The Money Business’.
The other type of person is the one who understand that the client is, in fact, the Client. The warm blooded, breathing collection of emotions, doubts, dreams and aspirations. This type of person sees that the money is simply a resource, along with their health and education and time.
These people are often called financial planners, but not always. They often do cashflow planning, but not always.
But they review the client’s whole life, not just the assets they happen to control
They understand that clients’ objectives involve real things, such as moving to Spain to retire, educating children and travelling the world. Money is a tool to achieve these things.
They understand that attitude to risk is important but so is capacity for loss, as well as a clear idea of the risk the client needs to take to achieve their goals.
These people are NOT in the money business, but in the people business.
The confusion can take place because we talk to the money business on behalf of our clients, and we speak their language.
Truth be told, we often came from the money business, and that has left us with habits and processes that may no longer be appropriate.
The danger is that is we look like the money business to the untrained eye. It’s easy to use their processes. It’s comfortable and simple to ‘review the portfolio’.
The danger is that we train the client that we are only interested in the money. So that’s what we talk about. Yields, rebalancing, market timing. All that stuff.
Is that our real added value? Turning up once a year to read a computer printed summary of the portfolio? But is that what we want to do?
Take a quick test. Look at your website and brochure and other client take on materials.
Award yourself two points for each reference to a client’s emotions, real life objectives, circumstance or human outcome.
Take one point away for each mention of a product, tax wrapper or fund.
Do you end up with a positive number?
It’s all about the business we are in – are you in the money business or the people business?
Phil Billingham is the founder of the Phil Billingham Partnership