A financial planner is walking Sue Truman and Sue’s husband, Harry, through a statement of advice (SoA). Suddenly, Sue starts feeling unwell, but dismisses it as just morning sickness.
An alert adviser would realise that Sue has just revealed she’s pregnant, a bit of a development since the last meeting, which might throw a spanner into a plan that the adviser has spent hours painstakingly constructing.
Despite having prepped extensively for the presentation, the adviser must now think on her feet: What will the new arrival’s impact be on short- and medium-term cash flow, on Sue and Harry’s insurance needs, on their future education expenses? They’re not simple things to assess on the fly, even for experienced practitioners.
But for students in the 2017 AMP University Challenge Finals Day, the situation is even more, well, challenging. For many, despite studying financial planning at university or TAFE, this is their first experience dealing with ‘clients’ (role-played in this instance by AMP Horizons Adviser Academy recruitment consultants Liz Owen and Andrew Cooper).
The students’ responses to Sue’s revelation ranged from apparently oblivious to what was later described as “a Macaulay Culkin moment” (as in his iconic facial expression from the movie Home Alone). How they handle the news is assessed carefully by a panel of judges, and contributes to the mark assigned to this aspect of the day’s activities.
They’re not being graded on the technical content and validity of their advice solution; that has been assessed already, and it’s why they’re finalists in the competition in the first place, the 11 of them selected from 700 students who entered the challenge this year. This is about giving them a taste of the real work of a financial planner.
Feedback from the judges, while sometimes blunt, is constructive:
- Ask early on in a meeting if anything has happened since last time – you know, just in case there are, for example, new arrivals on the way, (Sue and Harry are, in fact, expecting twins). If this news changes everything, say so, and schedule another meeting to present revised advice, incorporating the new information.
- Remember that engaging effectively with a client is not just about reciting what’s in the SoA and how much money they are going to make or save. It’s also about listening, addressing concerns and answering questions. Never be afraid to say ‘I don’t know’ in response to a question. But if you don’t know, make sure to find out the answer and follow up.
Meeting the client is about recognising when something has gone over a client’s head and when it’s, therefore, appropriate to spend some time explaining things. It’s also about consistently articulating what is important to the client and relating the advice back to those issues. And it’s about using an SoA as a prompt, not as a script.
The client meeting is one of three challenges the students face during a long day, which starts with a technical quiz run like the TV show Who Wants to Be a Millionaire.
The quiz produces tight competition and an encouraging result – the lowest score in this year’s quiz matches the highest in last year’s. Through the day, the finalists are supported and encouraged by coaches assigned to each team, helping them overcome any trepidation about the day’s events so they can make the most of what’s going on.
Last up on the day is an eight-minute speech by each team, outlining a practical step that can be taken to address the ageing population and the resulting age pension issues. It reveals a cohort deeply engaged with the financial sector and its challenges.
Their suggestions range from formally incorporating financial literacy workshops into the financial planning process, to an app that tracks a client’s actual progress towards the goals set out in the SoA. LifeNav, they call it, would be a tool to promote engagement and foster self-sufficiency, and they liken it to a “GPS that tracks where you are” on the path to a financial goal.
They examine how clients’ attitudes towards retirement, wealth and financial planners can be addressed. To improve engagement, they suggest changing the conversation from “let me help you”, to “let me help you help yourself”. It’s about encouraging people to see financial planning as “a support mechanism, not as a last resort”.
They identify both macro and micro opportunities for the profession. The macro opportunities include improving financial literacy among younger clients, and they suggest programs targeted at the younger generations to equip them with lifelong skills and renew the industry’s ageing client base. They suggest embedding advisers in schools.
They also suggest that alleviating the issues Australia faces requires a holistic, inter-generational approach, and that the financial planning industry is at the forefront of this opportunity. They recommend initiatives at a client level including, broadly, better managing the looming intergenerational transfer of wealth.
They urge the encouragement of a more active engagement with retirement, including using technology to make general advice cheaper and easier to deliver.
“Some of you may say this already exists…but looking at it, the information is not provided in an engaging enough manner,” they say. A better level of basic understanding of retirement would ultimately make the planner’s task easier, and increase the likelihood of individuals taking and acting on advice.
“What if, when a client actually comes in, you can give them virtual reality technology to see what their retirement would look like – places they may want to visit, or what a day in the life of retirement could look like?” they ask.
Retirement could come to life, instead of being seen as some abstract financial target.
“It would allow the client to be more immersed in their goal,” they say. “By seeing it through their own eyes, [they could] solidify that goal through a visual image of what they’re working towards…instead of saying, ‘Oh, we need to retire on $60,000 a year.’ ”
They question the presumed link between financial literacy and a propensity to save for retirement, and draw parallels with climate change activists’ difficulty in trying to get people to care about something that seems distant to them.
Behavioural research suggests that a solution to a far-off problem framed as an immediate sacrifice tends to turn people off. Some astute insights emerge: “If we can get clients to internalise super as an asset that they currently own and control, this can make the benefits of retirement planning more immediate.”
The presentations reference a recent ANZ financial literacy survey, which found that 20 per cent of respondents engaged with a financial planner in the last year but 35 per cent consulted friends and family for advice.
“One interpretation of this is that people do not value the professional advice of planners because they can already get it somewhere else,” they suggest. But there’s an instructive analogue in another profession.
“Doctors are operating in an information age, where clients can self-diagnose themselves before they come in,” they say. “Doctors have positioned themselves very successfully as the experts. People still come in to see the doctors, because they want to see their [circumstances] filtered through the eyes of a professional. This is all about attitudes towards the profession.”
By the end of Finals Day, only a handful of marks will separate first from fifth place. It is the tightest finish on record. Each of the day’s challenges was won by a different team. Ultimately, though, it’s not really about who wins (try telling them that) but about providing an environment where would-be financial planners can get a taste of what it’s all about. For some, it clearly cements a career decision. For others, it gives them something to think about.
It’s sometimes easy to forget that these are students with an average age of 23 and, for the most part, no practical experience of the industry, its practitioners or how it all works. If this is the future of the profession, it’s undoubtedly in good hands.
And the winner is …
- First place: Griffith Elite Group (Griffith University) Members: Monica Rayos and Artur Kurnikov. Coach: Vanessa Vu, AMP planner development coach.
- Second place: Sequoia Advisory (University of Queensland) Team: Angus Kizil, Patrick Egstorf and Sean McBurnie. Coach: Clint Adams, AMP planner development coach.
- Third place: Getting Old and Dying (Western Sydney University) Team: Tim Veloso, Jacob Robach and Aiden Dela Cruz. Coach: Gavin Morgan, AMP planner development coach.
- Fourth place: JaCa (TAFE NSW – Higher Education) Members: Jacob Kaczkowski and Clive Moyo. Coach: Eddie Curto, AMP planner development coach (and quizmaster).
- Fifth place: Kimberley Guild (La Trobe University) Member: Kimberley Guild. Coach: Charm Ingram, AMP manager business consulting and planning