Why planners should not have issues with financial products

One of the key differentiators of a CERTIFIED FINANCIAL PLANNER ® professional is that we are process, planning and then ultimately advice driven. The product we offer is the "financial plan” rather than the product of a preferred provider. This is why CFP® professionals stand out at the pinnacle of the financial planning industry.

Many planners believe that their value is derived from "selling” a particular product and its benefits. That is the most discrediting thing a planner can do. The question is simply: Are you a financial planner or merely a product advisor or agent?

The planner who believes that he or she can build a sustainable business model and deliver ongoing value to a client by "pushing” product is in for a big surprise. There are two reasons for this.

Firstly, if we look at global trends it seems inevitable that commissions on financial products will be consigned to the history books. How will planners be remunerated when this happens? And will their clients be willing to pay them directly instead of a commission being facilitated through a product house?

You must bear in mind that before a client pays you directly they will want answers to the following: What is your value add? And must I "buy” this product from you, or can I simply access it via the internet or other distribution channels?

Secondly, financial planners should have a proper process to establish the needs and objectives of their clients before they begin to consider an appropriate product. I am not referring here to a "quick and easy” software package typically designed by a product house to process information and ease the selling of a product.

A financial planning process entails time spent with clients to get to know them, their needs, life goals, fears, etc and based on this knowledge to generate a custom-made financial life plan. Once this is achieved the financial plan / advice become the product through which value add is transferred to your client. This is the foundation of both a sustainable business model and delivering true value add to a client.

Although a financial product of some description will eventually be considered to facilitate the issues raised during the advice stage, the focus will be on the planning process and resulting financial objectives. This is the process that our and many other practices follow. Clients buy into the plan and at the end of such a process they ask: Now what product provider would you suggest we use to implement this plan? If this is the type of question I get at the end of a process, then I know the process is working!

In future reviews our clients can often not recall the name of the financial products we used to implement their plan. This confirms to me that my clients have "bought” my process and the resultant financial life plan rather than some or other financial product. All the issues that planners spend so much time on such as policy wordings, churning of products by other planners, and lapses fades away… And we are free to spend time on the really important issue, namely financial planning.