Chris Budd's blocker to meaningful financial planning
For intermediaries only
Author and chairman of the Initiative for Financial Wellbeing, Chris Budd explains how he developed his ‘coaching then planning then advice’ approach, and how he discovered the big blockage to delivering meaningful financial planning
Back in 2011, I began training to be a business coach. I started by taking the certificate in business coaching, delivered by Jan Bowen Nielsen of Quiver Management.
Two years later I passed my diploma. I learned many things, but perhaps the deepest (and hardest to achieve) was the importance of taking myself out of a conversation.
I also realised the power that this approach could give to a financial planning process.
Coaching, then planning, then advice
I started bringing the coaching skills I had been taught into financial planning meetings. Very quickly I saw how much deeper the conversations went, and how much more transformative the financial advice became.
To share this with other advisers I developed a presentation about this idea of using a ‘coaching then planning then advice' approach.
In short, I believe the advice process is significantly enhanced by coaching a client to understand themselves better. This needs to happen before creating the plan (presumably with a cash flow forecast), which must happen before applying the investment/tax/pension technical knowledge.
I'm not suggesting the technical knowledge is not important, but I am suggesting it should be largely outside of the meeting room.
I've been presenting this ‘coaching then planning then advice' model ever since IFP in 2014, Back2Y in 2015 and at many PFS events - basically, anywhere that will have me!
Financial wellbeing overlay
Financial wellbeing has now given this process an additional dimension.
There are two parts to financial wellbeing: the universal principles of the relationship between money and happiness; and what makes each individual happy. Combining these helps reveal to a client what will allow them to lead a meaningful and happy life.
If we go slightly deeper on this second point, helping your client to understand themselves better should include helping them to understand both what makes them happy, and what prevents them from being happy.
This means using good coaching skills - questioning and listening skills - along with with an understanding of how our behaviours lead us to make poor financial decisions.
Combining financial wellbeing ideas, coaching skills and some behavioural finance principles leads, I would suggest, to truly meaningful financial advice.
The big blocker
It could be argued such topics should be a compulsory part of the advisers training. This is particularly because there is one significant blockage to advisers delivering financial planning and advice in this way.
All throughout our education, at school, university and our technical exams, we are trained to find solutions. Helping the client understand themselves better, however, does not involve solving a problem. Instead, coaching skills involve making the discussion all about the client - and this is not something that comes naturally to us.
It is often said that 95% of people consider themselves to be above-average drivers. I would extend this to say that 95% of financial advisers consider themselves above average listeners.
One thing that the two years achieving my business coaching diploma taught me was that I am not good at listening. I am always so eager to provide the answer that seems so obvious to me that I have to work very hard to help them, but the problem with themselves.
This takes training and practice and should not be taken lightly.
Those two years of training to be a business coach completely changed me as a person, and also as a financial adviser. I continue to enjoy coaching, to be in a meeting thinking of nothing but how to help the person in front of me work out the answers to their problems.
Acknowledging that we are not naturally inclined to being really good at listening and questioning is, I believe, a key part in delivering truly meaningful financial planning.