How to give advice that clients will actually follow

By Holly Black

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Jan 31, 2019
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Giving financial advice is second nature to IFAs, but making it stick can be trickier.

Some clients might leave their meeting with the best of intentions but find that the objectives they set with their adviser start to slip down their list of priorities.

Others may find their annual review comes around quicker than they had expected and might not have finished off their financial to-do list in the intervening months.

As well as working out their needs and objectives, advisers have to determine how best to ensure clients adhere to the advice they offer.

As technology continues to play a greater part in people’s lives, the opportunities to create apps and online portals to help clients stay on top of their finances also become greater.

Yet while these developments are certainly on the radars of some advisers, others prefer to keep the process much simpler. Many insist that adding extra bells and whistles is less important than the relationship between IFA and client.

Informed Choice director Martin Bamford says: “Making advice stick is arguably just as important as delivering great advice in the first place; advice is of little use if clients don’t follow it.”

Plan Money director Pete Chadborn says it is important to break the advice process down into manageable stages so that clients are not overwhelmed, and have time to digest any recommendations.

He believes that being transparent about costs and clear about what level of service a client is paying for can help to make them feel more committed to the advice process.

This may particularly be the case where clients are paying a flat fee for a particular service, rather than a percentage charge, as they will want to ensure they are “getting their money’s worth”.

Chadborn adds: “Mutually agreeing objectives sounds obvious, but when clients appreciate that the adviser is working towards a mutual goal, rather than the adviser’s own agenda, they tend to more readily follow advice.”

He says making sure clients understand the reason why a recommendation is being made is also key.

Candid Money director Justin Modray agrees: “Provided we do a good job of listening and discussing what is appropriate, following our advice should normally be a fait accompli, since it’s simply a natural progression of what has already been agreed.”

Bamford says having regular reviews also helps to make advice stick. Even before Mifid II made annual suitability compulsory, advisers often liked to check in with clients at least once a year, to maintain their relationship and ensure any advice that had been given was still relevant.

Regular check-ins should help clients continue feeling engaged with their finances, rather than forgetting about them for years at a time.

Bamford likes to give clients a bit of homework to help get them invested in the advice process.

He sets simple tasks such as an expenditure form or a financial questionnaire around an introductory meeting or review session.

This, he adds, is also a good way to spot those clients who are less likely to follow through on advice.

“Clients who aren’t willing to do this preparation, or who do it very reluctantly, tend to be the hardest to work with in terms of implementing our advice or responding to advice in a timely fashion,” he says.

Other red flags include clients who try to rush the process or are unwilling to provide important information. Modray says another indicator may be when a client starts to want to choose their own funds for their portfolio. He notes: “We will take the time to explain the rationale for funds we have selected and that usually gets the relationship back on an even keel.”

Chase de Vere chartered financial planner Patrick Connolly says: “If a client disagrees with the advice given, we need to understand why that is. If they proceed, we will fully document that the course of action they have taken is not what we have recommended and make clear the potential consequences of this to the client.”

But where a client will not follow advice, IFAs say they will tend to end the relationship – or not start one in the first place.

Indeed, there is a feeling among advisers that they would prefer not to transact business with clients who are going to be difficult to work with or resistant to advice. Modray says: “We can never force clients to accept our advice. In fact, we wouldn’t dream of trying.”

Connolly adds: “We will refuse to process business if we believe a course of action will be significantly detrimental to them.”

Clients might want additional bonuses to incentivise sticking with a plan, but some advisers do not believe they should get any.

Bamford says: “I’ve never offered rewards for sticking to a plan. After all, the reward should be a wealthier life.”

Certain advisers are turning to other tools in their armoury to help ensure clients follow through on their advice.

Courtiers head of private clients Graeme Clark is currently developing a mobile phone app which will help clients keep an eye on their investments, as well as offering some financial forecasting capabilities.

He says: “Using technology, we have also developed tools such as cashflow modelling and a secure online account for clients to review their investments at any time.”

Yet despite these technological developments, Clark also believes that the relationship between advisers and clients is the most important factor in determining whether advice will be followed.

He concludes: “These technological aspects of the wealth management process are valued by clients, but they aren’t the sole reason that clients entrust us with their livelihoods. It essentially comes down to trust.”

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Money Marketing

Money Marketing, Centaur

The leading magazine and website for IFAs and professional financial advisers. Pensions, investment, mortgages, protection, platforms and regulation news.

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John 5 months ago

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John 5 months ago