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Scope versus advice

People who articulate a solution are often really articulating a problem they want to solve.

Thursday, April 26th 2018, 9:38AM

by Russell Hutchinson

The solutions they suggest are usually bad. Implementing them is not likely to lead to a satisfied customer because if they had the expertise to solve their problems, they would have already. 
This is exemplified in really specific scope boundaries that a client may set, and refuse to negotiate.

A client that tells us exactly what kind of cover they want, how much of it, and for how much money, can lay a trap for us. Sometimes the trap is garnished with a very specific exclusion “I don’t want any of that income protection stuff.”

These are traps where they are exercising a prejudice, or belief with insufficient information, without considering factors about which the client may be ignorant. Slavishly recording such scope limits without challenging them looks like a highway to hell.

People with good reasons for their scope limits are usually happy to talk about them. But people who become very defensive and specific without offering information about their reasons for the limits are revealing that they are quite judgmental and defensive.  Not the kind of client you want to be navigating a complaint with. That complaint may well come, because defensive people don’t like taking responsibility for their own actions. But you, being the ‘adviser’ may be in danger because very, very, specific scope definitions leave little room for advice.

Of course, specific scope definitions, in the right place, can be an absolute winner. With the right client it may be appropriate to define scope such that you only tackle the financial questions that are both the most urgent and important, and leave the rest to another day. After all, a critical patient should be stabilised before we start offering advice on diet and exercise.

Speaking of actions, it seems to me that the essence of successful financial planning is to help clients take actions which create better financial outcomes.

The maths, almost anyone can learn, but helping clients make the behaviour change – that’s where the true genius lies. Which makes me wonder why business degrees were suggested by the Code Working Group as a minimum requirement. I bet behavioural psychology is more useful.

Likewise, in trying to pierce the motives of a client – or better yet, a couple, or group of clients – when they may not have clearly worked out in their minds what’s needed. The good ones will be relieved when you challenge them. That’s really what they need from an adviser.

There’s a data science guru on my team, Shaun Dowler, who has a brilliant way with words, combined with a chance conversation yesterday with Mark Daniels of Fidelity Life, led directly to this column. Thanks to both of them.

Tags: Opinion Russell Hutchinson

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