Advice for advisers: Give clients more face time

Hey there, time traveller!
This article was published 24/02/2010 (5737 days ago), so information in it may no longer be current.

Last week, we asked you to tell us what you want to read about in Dollars and Sense, and we took an informal poll on your habits and satisfaction level with your financial planning.

A big thanks to all of you who responded, as we were flooded with suggestions, insights and wisdom (and a lot of kind words!). I will get to those comments in a moment, but first I want to convey a lesson I learned that will make reading today’s column worthwhile.

This lesson is likely as instructive for financial advisers and planners as it is for consumers, and it was a recurring theme.

We asked last week whether people had a written financial plan, how often it was updated and their level of satisfaction with their current financial advisory relationship. Some interesting trends were revealed and reader insights were telling.

Roughly half of respondents have a written financial plan to which they could refer. However, many of these plans were five or more years old.

When asked how often these plans were reviewed and updated, only a few said annually or more frequently. Interestingly, those were the same people who were either highly satisfied with their advisers or they were do-it-yourselfers.

Those who expressed dissatisfaction with their advisers also said they and their adviser had either never reviewed the financial plan or had not done so for several years. There was a clear correlation between satisfaction and frequency of plan review, and frequency of contact from the adviser.

For more clarity, I sat down with one of these people, who had had a financial plan prepared by the private banking division of one of the major banks. He said the plan had seemed comprehensive, detailed and useful.

Satisfaction level — high.

Five years later, after tumultuous changes in the family situation and several meetings with the “relationship manager” at the private bank, the plan has not once been updated and the relationship manager has never even referred to the plan.

Satisfaction level — low.

We probed more to try to figure out why time and money would be spent creating a plan that would move the family toward their goals, and then zero time be spent on measuring progress against the milestones set up.

The best explanation was that this “adviser” had not prepared the plan, did not understand the science behind it, did not understand the usefulness and necessity of using it and the need to update it. (The plan had been prepared by the “financial planning department” at the bank’s head office.)

The more cynical of you may suggest the plan had been used for selling financial and insurance products. In this case, though, that did not seem to be the situation. This was more a well-meaning, but perhaps inept, attempt to help.

If this had been an isolated incident, I would not spend so much time on it, but this was a trend identified across the board by readers, as well as by the people who hire us. What they seem to want is to have a plan they can understand, regular meaningful contact with their adviser and relevant updates and improvements to their planning, as their situation evolves.

That’s not too much to ask, is it?

— — —

Readers generally liked the list of topics we provided last week. There were a lot of questions about snowbird issues, like travel insurance, Canadian health-care rules, U.S. real estate and the latest on IRS tax regulations.

New suggestions included overcoming inertia that prevents decision-making, non-financial issues surrounding retirement and more attention to young people and the issues they face. Readers listed things like paying off student debt, managing other debt effectively, goal-setting, starting a savings plan, house and mortgage decisions, life insurance and steps to take in preparation for marriage. It looks like we have a full agenda!

David Christianson is a fee-for-service financial planner and portfolio manager, at Wellington West Total Wealth Management Inc. providing comprehensive financial advice and management. You can e-mail him at dchristianson@wellwest.ca or visit his blog at www.davidchristianson.com.

David Christianson
Personal finance columnist

David has been a practicing financial planner and life advisor since 1982, specializing in helping clients identify and reach their most important goals, and then helping them manage all their financial affairs, including investments.

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