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What do planners and the profession think?

So far in this white paper Phil has posed some big questions. They are the kind of questions that prompt a myriad of answers and no doubt more questions, depending on your own experience and point of view.

To get a sense of the wider perspective across the profession, we held a virtual roundtable debate to see what planners, professional bodies and planning organisations thought about some of these key topics and how we might take financial planning forward.

Introducing our round table panellists…

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Phil Billingham

Director, Perceptive Planning

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Gerhardt Meyer

Chairperson 2019-20, Financial Planning Standards Board

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Keith Richards

Chief executive, Personal Finance Society

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Kerry Nelson

Chief executive, Nexus Independent Financial Advisers

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Nicola Ellis

Director, Wellington Wealth

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Rohan Sivajoti

Director and head of innovation, NextGen Planners

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Sally Plant

Head of financial planning, Chartered Institute for Securities & Investment

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Tom Morris

Executive member, Initiative for Financial Wellbeing

To get the roundtable discussion started we asked Phil to set the scene in terms of his thinking in the previous couple of chapters.

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In chapter one Phil looked at the idea of ‘true’ financial planning, what this means and whether we have got away from it.

But Sally Plant, head of financial planning at the Chartered Institute for Securities & Investment (CISI), suggested that the opposite in fact might be true, with the general trend being towards financial planning rather than away from it.

She said: “I think that’s due to a combination of mega-trends, such as longevity and pension freedoms, but also the ever-changing world we are in. With the effects of Brexit and the pandemic, with shifting mindsets and shifting risk, people are looking more towards goal-based planning, which is what true financial planning is about.

“When we speak to our members, we see that the need for financial planning is there. But the fact is, consumers can’t want financial planning if they don’t know what it is. When people go to see a planner they’re excited by the proposition, but if they don’t know what it is, they’re not going to look for it. There is an education and consumer awareness piece of work there.”

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“Due to a combination of mega-trends, people are looking more towards goal-based financial planning, which is what true financial planning is about.”
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“In conversations with them, the FCA is actually quite concerned about trying to force people down a single route.”

Within the profession, there have been concerns about people calling themselves financial planners when they haven’t met the required standards, whether that’s chartered or certified.

Keith Richards, outgoing chief executive of the Personal Finance Society (PFS), said “I think in the general market, when people refer to true financial planning, most financial advisers consider that they do financial planning. Now, the fact that it doesn't meet a methodology adopted by a group or an organisation is often what's caused some conflict in the market.”

Keith said he’s long seen the chartered and certified financial planner (CFP) routes as complementary and whilst the PFS membership is a broad church, they have taken an inclusive approach to share good practice of financial planning through its Power financial planning initiative to create guides and material with financial planning at the heart of what all advisers do.

Yet Keith pointed out that from a consumer perspective, financial planning is a generic term, in the same way that advice is which is important for us to remember as ultimately, it’s the public’s view that counts.

He said: “We’ve also been battling with regulatory environments where the regulator itself doesn’t differentiate [between advice and planning]. In conversations, the FCA is understandably concerned about trying to force people down a single route and worth bearing in mind the unintended consequences accordingly. Some people in their life journey have a simple, transactional need for professional advice, rather than the full-blown holistic plan where firms might otherwise be deliberately seen as charging clients for an ongoing service they may have less need for. But we all know that transactional clients can turn into life-long clients once they fully recognise the value of financial planning, but it must be their decision and choice.”

Phil noted that from a global perspective, a lot of the growth in financial planning designations around the world stems from large organisations where the financial planning element is questionable.

He said: “If you look at organisations in countries with a developing middle class, whether that’s India, China, Malaysia or Indonesia, they have got the CFP licence.

But if you look at what their staff are doing all day, they are selling products. There is no financial planning, or no attempt at financial planning.”

Rohan Sivajoti, director and head of innovation at NextGen Planners believes the challenge in getting financial planning out to more people lies in the nature of the service and the cost of delivery. He said: “Planning is a lot more of an in-depth process, it takes more work than just some straight up product style advice service. So the people who can afford to pay for financial planning are the upper echelons of society… it’s not cost-effective for somebody on a low income to receive proper financial planning.”

Nicola Ellis, director of Wellington Wealth, agreed noting that the advice gap was massive and the planning gap even bigger, and said there was a need to better articulate the full range of advice and planning services on offer. Here’s what they had to say:

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“Is financial planning in its current state doing its bit for the greater good and for wider society? I would argue, probably not.”
“The advice gap that’s already there is massive, and I think the planning gap is even bigger.”

Bridging the gap

For those that are fully subscribed to the financial planning model, it can be hard to see people calling themselves planners who don’t deliver planning services, or providers launching so-called ‘financial planning’ arms that are simply a means of distribution.

Tom Morris, executive member of the Initiative for Financial Wellbeing and director at Ovation Finance, said instances like these can rankle, and can diminish the hard work that goes into ‘proper’ financial planning.

He also picked up on Nicola’s point about the advice and planning gap, and suggested the answer might lie in a guidance/coaching approach.

“There’s an awful lot of people who fall into the advice gap. There’s also this big cohort of financial coaches that are growing by the month who could help us with filling that gap. Maybe that’s something we could do – bring those coaches into the fold a bit more and say to them: ‘When people get to the point where their affairs get more complicated, or where they need hand holding to push the button and make a decision, where they need regulated advice as well as the planning, we’re here to help.’”

Gerhardt Meyer, former chairperson of the Financial Planning Standards Board (FPSB), said the debate around advice versus planning had been a long-running one around the world.

He said: “I feel like I’ve been in this conversation for the past 10 years with tea breaks in between, it’s fascinating.

“We’ve seen examples in Malaysia which tried to regulate the concept and activities of financial planning. This led to infighting around which regulations should apply to which people, and it became really difficult to govern. Meanwhile the Australian regulator gave up and said: ‘financial adviser, financial planner, it’s the same thing.’ Where we’ve gotten to in the South African debate is to try and define what it means to be a planner and an adviser, and get away from a debate about activities.”

In terms of educating the public about financial planning, Gerhardt said what’s worked quite well in South Africa is for professional bodies and their members to deliver pro bono work, and community outreach programmes where people can talk about financial planning.

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“I think we have all the component parts now in financial planning around the world. Now we just have to be clear with the consumer what they should expect and what they’ll get.”
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“Consumers want to know they can trust us, and they care about what we're going to do for them. It doesn't really matter about the job title.”

Kerry Nelson, director of Nexus Independent Financial Advisers, pointed out that education around financial planning goes beyond firms’ existing clients and building wider consumer awareness, but applies from a recruitment point of view as well.

She said: “I think it's for us to be involved in the whole food chain, not only about having a sound understanding and knowledge of financial planning and the impact it has on our lives, but also encouraging people to come join us and be part of that journey in changing the perception of financial planning.

“At the end of the day, consumers want to know they can trust us, and they care about what we're going to do for them. It doesn't really matter about the job title. Actually what's important to us as businesses is how we can transform and translate good, sound advice, in whatever title we want to use, so that it impacts our clients' lives.”  

The evolution of financial planning

Arguably, the debate around the future of financial planning is less concerned with titles than the business model that underpins the financial planning process.

Phil put it this way: “Delivery of financial planning is a business model, not an aspiration.”

In that context, he believes people need to understand what it is they’re actually going to get when they go to a financial planner.

Gerhardt agreed, saying there was a need to distinguish between ‘what’ financial planning is ahead of ‘how’ to structure the profession.

The panellists all agreed on the role of recruitment and appealing to the younger generations as a way of evolving planning for the future.

Sally said: “Attracting good people into the profession is one of our biggest agenda items, because we can see a gap coming up and we can see a greater need for planning and all the wide breadth of propositions within our sector.

“So, it's about engaging and educating young people on how exciting being a planner is. It's entrepreneurial, you can have work-life balance, while still being ambitious with it. Lots of these key points attract the next generation who want more flexibility, and are looking at the use of technology. The pandemic has been a catalyst to us all using more technology, and has probably shot us ahead about five years in the space of several months. This is all attractive. So the goal is to make them realise a) what a planner does and what a good career it could be, and b) using that next generation to reach the consumer.”

Gerhardt said the pandemic had helped accelerate a more efficient process, with planners and their clients embracing planning sessions on Zoom and Teams, perhaps for the first time. But he said the central question remained about agreeing what the consumer should expect from a financial planning firm, and what firms themselves can do to build profitable, future-proof financial planning businesses.

He and Tom concluded by noting that once these issues have been nailed – including the all-important elevator pitch for financial planning – the profession would have a firm foundation for the future.

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“If we can make the elevator pitch for financial planners clear that’d be great.”

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