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It is important to understand the process the financial planner needs to follow with his client in a changed environment — the road they must walk together to achieve the best results. We have stated previously in this column that historically, most people looked to their retirement fund for security. The financial services industry offered investments, savings products and insurance products to enhance what people already had in terms of retirement funds.

In many cases, those products were all that people needed to supplement their pensions. In other words, they bought additional insurance and an investment top-up. As a result, we saw that advice with respect to investments and insurance became mostly a sales process.

We’re now in an area where many are not members of retirement funds, and those that are may not be adequately covered in terms of savings or risk.

While a retirement fund may cover a large portion of an individual’s savings and risk needs, their requirements will depend on their unique circumstances.

We see an increasing demand for an objective review of financial position and risk cover provision without an obligation to buy a product. This is the process that we need to sell with all due enthusiasm.

Most offer a plan to achieve the stated goals and cover the identified uncertainties. However, we need to take care to offer solutions that are theoretically and conceptually correct and appropriate.

Making and implementing recommendations under FAIS gives rise to work, risk and responsibility for us. For that we are entitled to be paid since most people are either too busy with earning their income or not equipped to do it themselves.

Few other professions have to deal with their client’s dreams, fears, goals, and family as well as the technical issues at hand. We find that it is not so much about right and wrong, but about appropriate and inappropriate. Clients have choices and consequences, and our value-add is that we are able to identify and communicate these at the first level, and assist with an appropriate choice at the next level.

 I do think that the financial planning process for the average family should involve investments, provision in the event of death, and provision in the event of disability, estates, wills and trusts and tax. I would say that medical cover and short-term insurance are also important areas that would need to be flagged by a financial planner and dealt with or referred.

While specialisation can add value, we find that once the work of preparing an investment or retirement plan is done, much of the data and a portion of the work for a life and disability cover analysis is in place. It follows that these aspects can be efficiently handled together.

We have found that a disciplined focus on a defined review process (with use of a checklist) has added significant value to clients. We often uncover issues giving rise to additional business that would not have occurred had we not used a pre-defined process.

There are three main areas of review, namely, an update of the current situation, consideration of specific planning issues and related matters.

The current situation update includes an update of background details and circumstances, an update of the balance sheet (material items), a look at the client’s current tax position and a review of their portfolio including current pension benefits.

Specific planning issues include a review of the retirement plan, adequacy of cover for short- and long-term disability, provision in the event of premature death, current will, and key elements of any trusts.

A review of related matters would include critical illness cover, medical aid, short-term cover, etc.

We need to pay special attention to providing valuable financial advice and council to our clients when we meet with them without allowing the intricacies and complexities of the investment and insurance products to take centre stage in our review. We add value by simplifying complex issues as opposed to getting something simple and making it complex.

Criticism has been levelled at a general level at advisers due to excessive focus on the product and not the person. We should remember that our role should be to plan for the person and not the money.

It is completely accepted that some of the key areas covered by a review may be outside our scope of our expertise. I would not propose that we need to be experts in all of those areas, but we should understand the key principles, opportunities and problems.

Referring the client to the appropriate expert and ensuring that the item is dealt with and completed will add a significant amount of value.
The bottom line is that process, standardisation, referral to experts and planning for the person and not the money is what will add value to our businesses and our clients.

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