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Lean on me: Rethinking the value of advice

BY JASON ANDRIESSEN | FRIDAY, 3 SEP 2021   3:04PM

A sense of control is important for our mental health and overall well-being. That's why the COVID lockdown has been so confronting for so many of us. And for the recently unemployed or retired, the lockdowns are proving particularly challenging.

The good news? Financial planners are uniquely placed to help their clients wrestle back a sense of control and recover their well-being and life satisfaction. But only if they're accessible when their clients need them most.

The bad news?  Higher education standards are forcing experienced advisers out. According to Adviser Ratings, more than a quarter of advisers left the industry in the two years to end December 2020.  Those that remain in the industry are burdened with escalating compliance costs and regulatory-driven service demands, so it's getting harder for advisers to be there for clients.

We all need somebody to lean on

When things go wrong in life, it's essential to have the right support. Major life changes are difficult for people in the best of times, especially when they're unexpected.

By example, most of us don't get to choose the timing of our retirement. According to the Australian Bureau of Statistics Retirement and retirement intentions research, the average age most of us plan to retire is 65, but in reality, the average age at retirement is around 55.

Australians typically retire unexpectedly because they lose their job, get sick or are required to care for a loved one.

Aside from mourning the loss of career identity, a sense of purpose and work community, the unwilling retiree typically experiences financial stress and feels anxious about an unknown future.

But it gets worse.  Now the lockdowns are preventing them from accessing their usual coping mechanisms. They are unable to distract themselves with travel, access face-to-face support from family and friends, or even get physically involved with community activities.

The second-best time to plant a tree

Most of us have heard the proverb "the best time to plant a tree was 20 years ago". It's a perspective straight out of the financial planning playbook. With enough time, financial planners can bridge the gap between where a client is today and what they're seeking to achieve in the future.

The trouble is, even if we do have the foresight to plan long-term, external events can throw us off track. In the words of Scottish poet Robert Burns, "foresight may be vain". In his famous poem To A Mouse, Burns explains (to a mouse) that you can't control external circumstances, no matter the amount of planning, "The best laid plans of mice and men go often awry".

Perhaps Robert Burns was right.  And if he was, then the value of financial advice lies not just in forward planning, but in being available to our clients and helping them recover from the unexpected.

Incidentally, the tree planting proverb concludes with "The second-best time [to plant a tree] is now". No matter the circumstances clients find themselves in life, they always have options and there are always opportunities.  They just need to know about them.

More than money

That's why financial planners play a critical role in helping clients recover and understand their power. When it comes to money, clients can control the important things. They can control how much they spend on discretionary wants and they can control when they spend it. They can control how they invest, and they can control when they sell their investments.

It's essential that clients feel in control of their finances because financial wellbeing is at the fulcrum of mental and overall wellbeing. When clients feel like their finances are getting on top of them, they drink more and sleep less, which negatively impacts on their mental health.

As their mental health deteriorates, they feel more financially stressed. Left unaddressed, it can become a vicious cycle.

That's why financial planners play a critical role in the lives of clients, enhancing their wellbeing and life satisfaction. It's about more than money, and it's about more than a financial plan.

Saving tax, reducing fees and increasing expected returns are all important, and some of the value of a financial plan also lies in its structure and the sense of control it provides. But when it comes to the crunch, the real value of advice comes in the form of a professional adviser who is available when things go wrong.  We just need more of them.

Lean on Me (1972)

"If there is a load you have to bear

That you can't carry

I'm right up the road

I'll share your load

If you just call me".

Bill Withers

Jason Andriessen is a consulting partner at research and data analytics consultancy MYMAVINS.

1 comment so far
  

There are numerous issues to raise from this article:

- assumption that the financial planner is in sound mental health in spite of the increased regulatory compliance burden and diminished returns from their activity;

- where does the financial planner fit this role in to the time-constraining activities of compliance, continuing education/ professional development and business development;

- are we adequately skilled to deal with mental health issues;

- how are we covered if our offered assistance results in unfortunate, even tragic, outcomes?

I am totally on-side with the sentiment of Jason's article, but am concerned that, in the face of a pandemic, the skills required are certainly beyond me in this circumstance - and I suspect that I am not alone.

ERIC WALTERS WALTERS  |  15 SEP 2021   3.24PM