‘Simple communication works best’ might be the easiest concept in the world to acknowledge but it’s much harder to get right, says adviser coach Carl Richards, a man who has made a reputation by simplifying complex topics.
Richards, a former financial adviser and practice owner from the US who is now better known as the ‘Sketch Guy’ – his alter ego in a popular weekly column he writes in The New York Times – has made a living out of bringing topics and concepts back to their basic, simple core.
That’s why advisers in Australia and around the world should listen when Richards says they are often prone to over-complicated communication, especially since they should be better than most at expressing ideas with simplicity and clarity, for the benefit of their clients.
This over-complication is born of advisers’ tendency to move too quickly to suggest an investment solution, instead of taking the time to properly understand a client’s personal situation, Richards reckons.
“The most important thing an adviser can do is have a clear conversation with clients to help them clarify their goals and then remind them what they said and what was important to them when they are thinking of doing something stupid,” Richards says. “Then and only then, I tell advisers, should you go out and scour the planet for the right product to populate that plan. The product or investment solution is the least important part of your job. How can you define good product if you don’t know what you’re using it for?” Richards asks.
Richards, who will be headlining workshop three in the Engage stream at the 2018 FPA Professionals Congress on Thursday, sold his advice practice in 2012 and has since designed training courses to bring financial advisers and self-directed investors back to simple principles around goals and outcomes.
He says advisers have traditionally brought the wrong skills into the profession, making the communication necessary for quality advice more difficult.
“Many advisers were never taught how to have a conversation; they thought this was a technical job involving spreadsheets and calculators and that’s all we were taught,” Richards says. “The [Hayne] royal commission is making this clear now. Your value doesn’t lay in the spreadsheet and calculator work. You need to be able to do that stuff, but that’s not where your value as an adviser [lies].”
Richards points to his sketch ‘Our current reality and our future goals’ (pictured) as one that’s resonated most with clients and advisers.
“All that a lot of people in the financial services industry offer you is a straight line,” he says. “The problem is that the moment the client walks out the door the line changes.
“The point most advisers miss is that it’s not about a result, a product or a plan, it’s about a relationship, a process and working together over time. The clients of the good advisers know they’re going to be there when things go wrong, to help them make adjustments.”
New advisers coming into the industry are better at talking to clients, Richards says, based on his own experience.
“I do a lot of lecturing at universities and talking about this stuff is like preaching to the converted,” he says. “They say, ‘Is there another way to do this?’ Naturally, most aspiring advisers think advice is about listening carefully, asking questions and diagnosing thoroughly before even thinking about investment.”
On the other hand, advisers who have had experience working in a product-oriented advice practice find it more difficult to have simpler goals-focused conversations.
“There are a lot [of advisers] addicted to crack, where the crack is the financial product,” Richards says. “That crack is going away but many of them just want to keep taking it until they are forced out.”