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Mechanics and guides: The growing trend of dual role advisers

There’s a movement brewing in the advice industry towards financial wellbeing, with more advisers seeking deeper understanding with both clients and in fact themselves, Ayesha Venkataraman writes…

The advice industry is at another inflection point, says Octo Members Group managing director Lee Robertson.

He explains: "Every now and again, advice moves forward. Advisers have moved away from being a kind of distribution sales type arm, to being highly qualified, very good technical specialists. As the better of them seek to move forward, what they have realised is that you can have all the technical knowledge in the world, but you have got to have a real empathy, a real deep understanding of what makes their clients as human beings tick." "It's not about the money. It's about the people," he adds.

The Institute for Financial Wellbeing (IFW) founder Chris Budd calls this movement the third version of advice with the first version seeing advisers focused on the technical knowledge, followed by the development of cash-flow forecasting ten years hence. "What we're in now is version three, which is financial wellbeing, which takes the cash flow of the investment and adds two things," Budd says.

He adds: "Firstly, the soft skills of listening, questioning and silence. Secondly, we add the research that's available which tells us that more money does not make you more happy."

Since writing The Financial Wellbeing Book in 2015, Budd has noticed a growing number of people becoming more and more interested in it, he says, which led him to establish the IFW as a "meeting place for people who wanted to learn more about this new version of financial planning". Budd champions reframing the conversations advisers have with their clients about money, which requires advisers to hone their active listening skills. "Listening means active listening, which means understanding. As we're listening, we tend to be formulating our own thoughts, and our next question whereas active listening means properly listening to understand, and it doesn't come naturally.

"What is needed for clients is they need to be helping the client to find more options about what will make them happy in life," he says. In addition, advisers need to train their questioning skills. "I think the key is to keep it simple. Very often, people try and come up with really clever questions," he says.

Adding: "A trendy question now is something like what does money mean to you? But the trouble with that is, you're then framing the conversation to be about money. Whereas what you really want to say is what brings meaning and purpose to your life? What brings you joy? So that's a much simpler question."

And it was exactly this kind of simple questioning that helped a client realize that he was unhappy in his high-paying job as a senior partner of a city law firm, and switch professions, says Budd.

"The city law firm job wasn't bringing him joy, but instead great stress and lots of money, and actually financial planning made him realise that you do not need that much money - some but not that much. What he really wanted to do was help other people by teaching history, so he retrained to be a history teacher." Earlier this month, behavioural finance provider Shaping Wealth launched an outsourced chief behavioural officer (OCBO) membership programme to "meet the soaring need for training advisers in the psychology of financial planning", according to the firm.

Shaping Wealth co-founder Neil Bage calls it the world's first applied behavioural finance platform, which was first rolled out in the US where it started to "grow predominantly".

The platform offers advisers access to "behavioural content, courses, and community all aimed at applying behavioural finance to real world situations with real clients," says Bage. In addition to weekly content that will inspire better conversations, "prompting advisers to approach their clients in a different way", the platform also has monthly interviews with leading experts on aspects of human behaviour and finance, a 100-day fully immersive training programme for advisers as well as quarterly training sessions, delving deep into an important subject about the human experience of money, according to Bage.

"We're trying to upskill every adviser to have those deeper conversations." Robertson adds: "It's all about empowering the adviser themselves to move away from just the investment and the technical end. Now, they're just hygiene factors. But to really make sure the advice process - particularly at the moment with high inflation, low returns, bond yields all over the place - is about really addressing issues that are sitting front and foremost with the clients."

Bage says that OCBO also wants to help advisors be well too. "We want to look after the adviser and make sure that they as human beings are flourishing as well," says Bage.

To that end, the platform offers office hours with a licensed clinical psychologist for advisers to gain guidance on how to approach certain clients and cases. "One of the things that we explore with advisers is their personal experience - not as an adviser as a human being - of money. We asked them the question: what's your earliest experience of money? What was money like growing up for you? "We found this across the world with literally coming up to 100 advisers that we've worked really closely with. Every one of them has said, when you start exploring your own stories, your own emotions around money, it opens up things that maybe they didn't really want to open up. And yet, those are the questions they're asking clients every single day," says Bage.

Adding: "We believe that advisers play two roles, typically, they play the role of a mechanic and the play the role of a guide, and all of their technical training, all of their exams that they do all aims at making them better mechanics. They can tinker with the engine, and build up better asset allocations, they understand tax liabilities, cash flow, modelling, all of that stuff makes great mechanics, right? "But if a client comes to you, and they are anxious, because stock markets are falling, they don't need a mechanic, they need a guide. They need someone to say, allow me to help you. And a guide asks fundamentally different questions to a mechanic."

Bunker Riley Financial Planning Chartered financial planner and director Alex Riley says that he's delving into behavioural finance, having attended presentations by Bage and Budd, and most recently, signing up to the IFW and OCBO.

"Like a lot of advisers, I'm at the stage where I'm trying to figure out how to make it work best for me and my clients, and signing up to both of those programmes is basically a first step from my perspective to help me provide a better service to my clients," says Riley.


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