Blogs
Michelle Baltazar
Thursday, 18 February 2016 5:11pm

Words, not just actions, have the power to transform financial advice.

This week I attended a roadshow hosted by the Association of Financial Advisers (AFA).

It was pretty full-on: one speaker after another from early morning through to lunch on how financial advisers, particularly those who have just joined the industry, can grow their business.

There were several takeaways but three stood out the most to me.

Firstly, it was refreshing to see risk advice consultant and corporate trainer Chris Unwin talk about the importance of language to gain a prospective client's confidence.

He said words like  'insurance', 'insurances', 'disability', 'needs analysis' and 'income protection' are all familiar and popular terms - but must be avoided at all costs.

Instead, replace the same terms with 'protection', 'personal protection package', 'illness or accident', 'wants analysis' and 'income replacement' respectively.

These are words that people can relate to: "For example, don't use the word 'disability' especially for younger clients. Use 'illness or accident' instead because they can understand that at some point in their life, either of those could happen."

Secondly, business coach Stewart Bell, author of a book called 'Finnovation', gave a list of ideas on how to grow an advice practice including finding a niche, using digital communications platforms to full effect and ways to encourage clients to save up sooner rather than later.

"Procrastination is the greatest killer of value," said Bell.

Finally, Matt Heine, joint managing director at netwealth, challenged the audience to rethink how they assess their clients' investment needs and preferences. "Is it time to ditch the risk profiler?" he asked.

The consensus in the room was 'yes', but what's the alternative? Heine discussed the benefits of using a life-stage segmentation model, which factors in other issues that are just as important, if not more, than a client's risk tolerance level.

To me, the collective counsel of the presenters could lead to one thing: it shifts the mindset of the client from thinking of financial advice as a grudge decision to one that they would eventually be grateful for.

1 comment on this article
Lawrence Dewis from LAWRENCE FINANCIAL GROUP P/L wrote:

The current risk profiler used by most dealer groups is not just outdated it is nonsensical to a client.

ASIC requirements are "know your client" and "know your product". There is so much knowledge to be gained from properly knowing your clients. Then the portfolio construction process can begin to suit outcomes desired. Asset allocation will follow on from this in the portfolio construction, which should be unbiased. Portfolio construction processes and reviews should be dynamic not static.

Clients should not be pigeonholed by questions and numbers they (in must risk profilers) do not understand.

26 April 2016 3:53pm
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