The value of education in the advice process is as critical as the advice itself, especially when a client is inexperienced. The key is to ask the right questions at the early stages of a fact-find.
That way, you can weigh up how familiar your client is with the advice process and where you may need to fill gaps in their knowledge.
With younger clients that means a full analysis of their needs: building an emergency fund and putting income protection and life cover in place to provide the means to replenish losses should the worst happen.
When it comes to investing, we should be using the advice process and fact-find to carry out a deeper dive into investment preferences.
With younger generations, this is likely to include an appetite for green investments and more sustainable finance.
Those new to investing may not be aware of how complex sustainable investing can get, so this is where you will need to go into more detail with clients to find out how they feel about certain sectors, as well as positive and negative screening.
As the demographic of our clientele changes, financial advisers need to go the extra mile by adapting their processes to get a measure of clients’ passions and values.
That way, they will not only helping them secure their financial futures and becoming more resilient to financial shocks, but showing them how their investment decisions can make a positive difference to the causes they care about.
John Somerville is Head of Financial Services, Professional Education at The London Institute of Banking & Finance (LIBF)
