It’s a common refrain: Consumers do not value financial planning. They won’t pay a fee for advice. If planners didn’t receive commissions, there’d be no way of getting paid at all. I hear it time and time again as the debate about professionalism rages.
It’s true that many consumers are reluctant to pay for advice. They seem to think that to see a financial planner they have to be rich when, in fact, the reverse is true (if they want to be rich they have to see a financial planner).
But in certain quarters, at least, the client-won’t-pay argument is a cop-out. It’s an easy excuse for not grappling with some of the key reasons most adult Australians still do not seek a planner’s services.
The Financial Planning Association of Australia (FPA) has just had a decent stab at quantifying the value of advice. As Kristen Paech reports in this month’s cover story, the FPA has had little trouble demonstrating that the value of advice far outweighs its cost.
Presumably, if all goes according to plan, the FPA’s analysis will make the great mass of Australian adults wake up, recognise the value in financial planning, and make a beeline to their nearest planner’s door. That may not be as great a result as you imagine.
In the 1989 Kevin Costner movie Field of Dreams, Costner’s character, Ray Kinsella, is compelled to build a baseball field in the cornfields that surround his home. He believes the ghosts of the infamous Chicago Black Sox will turn up and play if he does.
“If you build it, he will come,” say the voices in Kinsella’s head. So he goes ahead and builds it, and sure enough, the players turn up.
Kinsella’s plan worked because he built the baseball field before the players arrived. It is to be hoped that the financial planning industry has not got it the wrong way round, and that the clients don’t come to play before the industry has built the right model to service them efficiently, transparently and cost-effectively.
If the FPA succeeds in driving hordes of new clients to the doors of financial planning offices, great. But then the onus is squarely on those inside the offices to not only appear professional, but to act that way, too.
Otherwise, the FPA’s plan will be regarded the same way Roger Ebert in the Chicago Sun-Times described Field of Dreams: “A fragile construction of one goofy fantasy after another.”
Due to a production oversight, Rod Bertino’s practice management column was omitted from last month’s Professional Planner. We’re pleased to say that we’ve ironed out the glitches, that Rod returns to the fold this month, and you can find his column on page 32.