Advisers and clients best suited to coach-player relationship
The relationship you have with your financial planner is comparable to the one that exists between a professional sports person and his or her coach that takes the form of an unbiased and objective collaboration through which there is continuous evaluation and implementation of strategies that deliver the desired outcomes.
According to Mark MacSymon, CFP professional and wealth manager at Private Client Holdings, a partnership relationship between financial planner and client, like that between sports person and coach, encourages open communication, sharing of ideas and challenging the status quo.
“In the profession of financial planning, the coach has the benefit of having oversight of similar journeys that other individuals and families in similar circumstances have undertaken — what worked, what didn’t, which strategies led to desirable outcomes and which strategies led to failure.
“They become a rational sounding board and this supports accurate and wellinformed decision making. Good financial planners are able to get the time-intensive work done of sifting through economic and political noise and reams of marketing material to determine what is relevant and what is not. The right strategy or combination of strategies matters and this is changing as new products, fund managers and money managers enter and exit the market.
“However, in a digital age where the flow of information is superfluous, it can happen that certain clients uncover good and bad investment ideas. In these scenarios, so long as an unbiased, objective relationship has been fostered, the wealth manager effectively acts as a sounding board, vetting options that are worth considering and discarding others.”
MacSymon, winner of the 2017 Financial Planning Institute’s Financial Planner of the Year award, contends that it helps to think of your financial planner as a “coach” who develops and explains the game plan, with your input, before sending you onto the playing field to implement it to the letter.
He says the good news is that your “coach” is always at your side — you can turn to him or her for advice and make continuous tweaks and improvements to the plan while the “game” is under way.
“Your financial planner draws on decades’ worth of statistics and a comprehensive knowledge of the investment and economic environment to draw up your financial game plan. We have details of countless financial journeys undertaken by clients with similar circumstances, so we understand what works and what does not and are able to put in place holistic financial plans that support desirable outcomes,” says MacSymon.
He says a regular client review is a perfect opportunity for your financial planner to reinforce your plan and discuss any mismatches between your expectations and your financial reality. “The review meeting is quite simple — we consider what has changed since the last meeting and decide whether any changes are necessary to better achieve your financial and lifestyle objectives.”
There is plenty of work that happens behind the scenes to ensure a successful review. MacSymon typically prepares a report which details how asset values have changed over the period, sets out how the client’s investible assets are positioned in relation to their purpose and assesses whether clients are on track to achieve their financial goals. This framework for achieving specific outcomes is imbedded within Private Client Holding’s investment process which champions goals-based wealth management.
“We also check that adequate provision is made for anticipated expenditures, whether any changes to the client’s will are necessary, whether tax minimising opportunities are being fully utilised and whether risks are sufficiently mitigated,” he says.
The main concerns raised by clients include whether they have made sufficient provisions to meet their financial objectives and whether they will have sufficient income to enjoy their preferred lifestyle throughout retirement. Investment performance is also top of mind with steep market corrections often placing strain on the client-advisor relationship.
Experience shows that clients who enjoy frequent interactions with their financial planners are better prepared for short-term fluctuations in portfolio values.
“An engaged client understands that performance is best assessed over full market cycles rather than over short time frames,” says MacSymon. “When the client’s expectations are aligned to the attainment of the goals detailed in their financial plan the interim portfolio performance, good or bad, becomes less of an issue.”
Human behaviour has a huge impact on financial decisions and discussions about money and its application can be emotive. Your financial planner plays a calming role by preventing you from taking knee-jerk financial decisions based on short-term political noise, market and currency volatility and negative news.
“It is incumbent on the financial planner to channel the energy and direction of the client conversation toward issues that need to be addressed and to subtly take ownership and control of the professional engagement in the same way that a doctor would carefully provide advice and counsel.”
This includes knowing when to seek help with complex financial problems. It is important for financial planners to understand their strengths and limitations — they cannot be everything to all clients. The backing your financial planner enjoys from his or her advice practice is a huge differentiator.
“Having specialists within the business in the fields of tax, fiduciary and portfolio management translates into more precise recommendations which can be executed timeously and efficiently, saving clients’ time and reducing the likelihood of costly errors,” he says. Private Client Holdings have a family-office approach to wealth management and it is this unique organisational structure with specialist divisions in tax, fiduciary and portfolio management that earned them winners of the International Adviser’s Best Practice award in SA.
“Complex financial plans are most powerful when there is a strong blend of synthesis between the various financial planning components.”
A coach keeps the team focused on the objective of winning; your financial planner keeps you focused on the longterm financial outcomes set out in your financial plan.
“A great way to keep clients focused on the end goal is to ensure they become actively involved in the planning process, using live simulations to illustrate how they are tracking toward their desired outcomes,” says MacSymon.
“Simulations are useful in showing the long-term impact of today’s financial decisions and encouraging the client to play an active and informed role in the planning process. An engaged, involved and informed client is aware of the financial behaviours needed to support his or her financial outcomes.”