Adviser workshop: How to offer guidance

As the single financial guidance body gets ready to open its doors, we ask the leading lights of the financial planning profession how to offer financial guidance without straying into advice.

Paul says...

We try to incur fees only where we add value. It can be a bit of a chicken and egg scenario.

You must understand what you need to do, and the client must understand what you can do for them.

If a client comes to see me with, say, £50,000 to invest I will ask three very simple questions: what is your time horizon? Are you aiming to get a better return than the bank? And are you willing to see your funds fluctuate?

If I ask those three questions and the answer to any of those questions is ‘no’, we should not be investing that money. I would class that as guidance, as it is very generic.

Defined benefit (DB) transfers are probably the stickiest subject when it comes to guidance, and you stray nearer to advice than the simpler areas.

In the first meeting we try to put them off. I have had lots of meetings where at the end of the first meeting, the person has left very happy. We put their mind at ease and tell them they do not need to look at a transfer.

Guidance is just a matter of sticking to facts and letting people project their circumstances onto that to reach their own conclusions. You are putting them in a more informed position and making them understand all the pros and cons.

Top tip:

Stick to the facts and let potential clients come to their own conclusion as to whether they need advice.

Top quote: 

'Defined benefit (DB) transfers are probably the stickiest subject when it comes to guidance, and you stray nearer to advice than the simpler areas.'

Paul Stocks is director of Dobson & Hodge

 

Paul says...

We try to incur fees only where we add value. It can be a bit of a chicken and egg scenario.

You must understand what you need to do, and the client must understand what you can do for them.

If a client comes to see me with, say, £50,000 to invest I will ask three very simple questions: what is your time horizon? Are you aiming to get a better return than the bank? And are you willing to see your funds fluctuate?

If I ask those three questions and the answer to any of those questions is ‘no’, we should not be investing that money. I would class that as guidance, as it is very generic.

Defined benefit (DB) transfers are probably the stickiest subject when it comes to guidance, and you stray nearer to advice than the simpler areas.

In the first meeting we try to put them off. I have had lots of meetings where at the end of the first meeting, the person has left very happy. We put their mind at ease and tell them they do not need to look at a transfer.

Guidance is just a matter of sticking to facts and letting people project their circumstances onto that to reach their own conclusions. You are putting them in a more informed position and making them understand all the pros and cons.

Top tip:

Stick to the facts and let potential clients come to their own conclusion as to whether they need advice.

Top quote: 

'Defined benefit (DB) transfers are probably the stickiest subject when it comes to guidance, and you stray nearer to advice than the simpler areas.'

Paul Stocks is director of Dobson & Hodge

 

Catherine says...

It is helpful to have my guidance service, Money Panel, as a separate business to Essendon Financial Planning. It makes the difference between guidance and advice very clear for clients.

I am very transparent. I say: ‘I am regulated and a financial planner but this is guidance and not advice’.

There have been times when a Money Panel client has said ‘thanks for that information – can you do it for me in an adviser capacity?’ At that point, I tell them we are moving into an advice service and a new terms of business comes out.

Having a separate business for guidance means there will never be that grey line for clients.

If someone came to me on the Money Panel with a DB transfer case I would not touch it. I could not tell someone not to go ahead with a transfer without giving advice.

The first thing I do for every client is offer them a 30-minute complimentary session and have a conversation with them about their objectives and what they are looking for.

If a client says they want to invest in an ISA, for example, but does not know what fund to invest in, you can educate them.

Once you get into the realm of opinion, you are in the advice space. A personal opinion is the same as a personal recommendation.

Top tip:

A separate guidance business ensures there is no scope for uncertainty.

T0p quote:

'If someone came to me on the Money Panel with a DB transfer case I would not touch it. I could not tell someone not to go ahead with a transfer without giving advice.'

Catherine Morgan is director at Essendon Financial Planning

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