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lifestyle financial planning

Lifestyle financial planning: coaching clients

Whether you call it lifestyle financial planning, holistic financial planning or something else, there’s no doubt that this is a popular topic of conversation nowadays. But there’s a problem. No one can quite agree on what it is and how it differs (if at all) from financial advice.

Lifestyle financial planning v financial advice

It would be presumptuous of me to suggest that i have all the answers; all I have is 35 years or so of experience to draw upon of either being an adviser, or observing advisers. It strikes me that in many respects, the similarities outweigh the differences. But where there are differences, they are important. For example, at the start of a new client relationship, the lifestyle financial planner may spend several hours:

• Coaching the client, enabling them to better understand what is important to them and why
• Focusing on what the client’s financial future needs to look like as a whole (rather than satisfying just a single need area)
• Discussing the ‘what if’s’ and they may use cashflow to illustrate the impact of these to the client

It’s about taking the time up-front to give the client clarity about how they can achieve the lifestyle they want both now and in the future. In other words, it’s not primarily about products or services.  It is the coaching skills of the planner, not their technical expertise, that are central to doing this.

Using GROW to structure the planning process

Back in 1992, Sir John Whitmore introduced the most widely used coaching model in the World. He looked at the sporting environment and identified the key skills sports coaches used. He then synthesised these to give those in business a really useful and catchy acronym: GROW. This stands for:

G – goals
R – reality
O – options
W – willingness or where next

As I say, this is widely used around the world by people managers to help get the best from their staff. It might also have a place in your business if you genuinely want to deliver lifestyle financial planning. In the next section, I’ll look at each of the four areas in more depth.

GROW – in more depth

This is what each of the four areas might look like in a lifestyle financial planning process.

Establish goals. This is the first part of a meeting with a new client. It should also form the first part of a review meeting with an existing client. It’s about understanding what the client is really looking for, i.e. their goals. Rarely will a client meet an adviser without having a purpose in mind, e.g. to transfer under-performing investments, invest an inheritance, plan their retirement etc. The planners key skill is to acknowledge this and then get the client’s agreement to exploring their wider goals. In other words, don’t start talking about products and solutions straight away. Certainly, not before you know what is truly important to them.

Current reality. This is about the ‘here and now’. What do they have and what don’t they have? What are the gaps and why? This is routine for all advisers nowadays but you’ll still hear compliance folk complaining that some advisers only collect hard facts, and miss the soft facts. The meeting notes or fact find might record the client’s expected retirement age and required income, but not say how the client wants to spend their retirement and what activities they intend to take up. This information would help to demonstrate why the advice is suitable for a specific client. More importantly, a client will only be interested in a pension to the extent that it provides the quality of retirement they are looking for. It’s not what it is, but what it does. So what does the client value the most? What are their goals? What are their key fears? A coaching planning style should establish these.

Options. Some solutions will be clear; others less so. When using GROW in a coaching context, this stage is about opening up possible options (not closing them down) to arrive at a range of possible outcomes. Then, it’s about picking the best option(s) and implementing them (which is the ‘W’ in GROW).

In the planning process, the same applies. What might differentiate the lifestyle financial planner is the depth of knowledge they will have gained at an early stage in the relationship and how this deep understanding of the client influences the eventual solution. If you’ve known a client for many years and still find out new important facts about them (and most of us have been there), it’s because we didn’t have enough of a conversation or ask the right questions early enough.

Establish the will (or where next). So you know what the client’s goals, fears and aspirations are. We’ve looked at shortfalls and possible solutions. Now it about prioritising and determining what the initial advice and ongoing service will look like. In the coaching sense, ‘will’ is about having the confidence or willingness to take action and there are again some parallels with lifestyle financial planning.

A key element of a lifestyle financial planner is their mindset. It’s about having a great conversation with the client, not being afraid to ask awkward questions, and asking about the client’s overall goals and fears (and not just those related to specific planning area). The planner’s job is primarily to ask questions and listen for much of the relationship, say 60-70% of the time. For many, it’s about the willingness to do so to this extent. This is the essence of what coaching is all about: seek first to truly understand, and then to be understood.

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