Sitting on a bus on the way to work, on a wet morning with the traffic at a standstill, I got to talking to a fellow commuter.
One of the occupational hazards of being a journalist is that when people find out what you do, they seem to want to talk – that is, if they do not immediately want to punch you in the mouth. And when they find out you write about financial planning, they want to talk about financial planning.
Let’s call my fellow traveller Clive.
Clive’s eyes lit up. “I’ve been to see a financial planner!” he said. Bracing myself, I thought: “OK, here it comes!” By way of background, Clive is in his mid-40s, married with two (high school-aged) kids, a dog and a mortgage. They had some debt they wanted to get rid of. And a relative in New Zealand died recently, leaving Clive’s family a modest sum.This windfall, the desire to free up some cashflow and a realisation that it’s about time he upped his contributions to super, combined to convince Clive it was time to seek some assistance.
The way Clive found the planner that he ended up going to see was instructive: he read some newspapers and magazines, and noted that a couple of financial planning firms seemed to crop up regularly. He was influenced by the fact they were quoted in stories. “I figured someone thought they were OK,” he said.
Then he simply contacted the office of the planning firms closest to where he lived, and made an appointment. He would only talk to a Certified Financial Planner, and he’d only talk to someone who had been with the firm for at least five years.
That narrowed down his choice, and meant he had to make two or three calls, but eventually he found someone he thought was worth talking to.
Clive had an initial meeting with the planner, at which they discussed general issues. Clive described it as a “get to know you” meeting – he had the clear impression that the planner was sussing Clive out as much as Clive was sussing the planner out. Clive was sent away with a CD containing a substantial spreadsheet and a questionnaire, which he and his wife filled in over the course of about a month. They recorded details of income and expenditure more or less as they occurred, answered questions about their attitude towards different scenarios, and so on.
Once the spreadsheet and questionnaire were complete, Clive e-mailed them back to the planner. A second appointment was booked. This one lasted more than two hours, and Clive says it was obvious that the planner had done her homework. She focused in very quickly on the issues that had been identified as needing immediate attention, and she had a good grasp of the couple’s current financial situation and their financial goals. She spent a lot of time explaining things and answering questions.
Clive admits to not reading all of the Statement of Advice, except for the parts that set out the proposed course of action (especially how the windfall could be invested). But he remembers being struck by how much it was going to cost – $3300, including GST. Clive says that figure, more than any of the specific advice in the SoA, was the talking point at home that night. They also considered implementing the advice themselves, but ultimately decided to go ahead with the planner.
They made contact, gave her the green light, and paid the fee on the MasterCard. That was in June, 2007. The 20 months or so since then have been rather rocky. Asset values have plunged. Unemployment is rising, and Clive is not 100 per cent sure he’ll keep his job.
So what is his opinion of financial planners today, having lived through such an experience?
Absolutely rock solid, that’s what. He got exactly what he was told he’d get: a structured approach to increasing his superannuation contributions (and some sound advice on the appropriate investment options); good use of his newly-free cashflow and a debt recycling strategy; a regular savings program outside super; and help deciding how to best use the windfall.
Everything had happened exactly as the planner had suggested it would. The ups and downs of investment markets barely rated a mention in Clive’s assessment, because they had barely rated a mention in how the planner had set out and explained her strategic advice. Markets would go up and down over time, she’d said, and while some of the movements could be extreme, they’d have little material long-term bearing on the strategy.
He’s been back to see the planner twice since the advice was implemented. She’s stayed in contact and kept him informed. He’s happy, and confident about his family’s financial future. Why isn’t Clive front-page news? Why do stories like Storm, and other planning catastrophes before that, dominate the headlines? I’ll tell you why: Clive’s experience is how it’s meant to be. In that sense, it’s not news at all.
I’ve used this analogy before, but imagine the next plane you fly on takes off, flies to its destination and lands without incident. There’ll be no news coverage of your flight. But imagine your plane takes off, hits a flock of birds and ditches into a river. Then you’ll be front page and top-of-the-bulletin news right around the world.
In a perverse way, maybe we should be taking heart from the outrage that accompanies financial planning atrocities, because it suggests that such events are still seen as sufficiently newsworthy to deserve the media’s time and energy.
A happy client and a successfully implemented plan – that’s just not news. And nor should it ever be.
