Are you and your financial planner executing the same financial game plan?

Article 2 in a series of 5 written by Gareth Stokes for the Financial Planning Institute of Southern Africa (www.fpi.co.za). With thanks to Mark MacSymon CFP®, winner of the 2017 FPI Financial Planner of the Year competition and a wealth manager at Private Client Holdings.

The relationship that you have with your financial planner is comparable to the one that exists between a professional sportsperson and his or her coach. It takes the form of an unbiased and objective collaboration through which you and your financial planner continuously evaluate and implement the strategies that will deliver your desired long term financial outcomes.

Mark MacSymon, CERTIFIED FINANCAL PLANNER® professional and proud winner of the 2017 Financial Planning Institute’s Financial Planner of the Year award, says that it helps to think of your financial planner as a ‘coach’ who develops and explains the game plan, with your input, before sending you onto the playing field to implement it ‘to the letter’. The good news is that your ‘coach’ is always at your side – you can turn to him or her for advice and make continuous tweaks and improvements to the plan while the ‘game’ is underway.

Your financial planner draws on decades’ worth of statistics and a comprehensive knowledge of the investment and economic environment to draw up your financial game plan. “We have details of countless financial journeys undertaken by clients with similar circumstances, so we understand what works and what does not and are able to put in place holistic financial plans that support desirable outcomes,” says MacSymon.

To ensure success financial planners must keep clients informed of the game plan and make sure that they perform in line with expectations, by sticking to it. An annual client review is a perfect opportunity for your financial planner to reinforce your plan and discuss any mismatches between your expectations and your financial reality. “The essence of a review meeting is quite simple – we consider what has changed since the last meeting and decide whether any changes are necessary to better achieve your financial and lifestyle objectives,” says MacSymon.

There is plenty of work that happens behind the scenes to ensure a successful review. MacSymon typically prepares a report which details how asset values have changed over the period, sets out how the client’s investible assets are positioned in relation to their purpose and assesses whether clients are on track to achieve their financial goals. “We also check that adequate provision is made for anticipated expenditures, whether any changes to the client’s Will are necessary, whether tax minimising opportunities are being fully utilised and whether risks are sufficiently mitigated,” he says.

The main concerns raised by clients during the annual review include whether they have made sufficient provisions to meet their stated financial objectives and whether they will have sufficient income to enjoy their preferred lifestyle throughout retirement. Investment performance is also ‘top of mind’ with steep market corrections often placing strain on the client-advisor relationship.

Experience shows that clients who enjoy frequent interactions with their financial planners are better prepared for short term fluctuations in portfolio values. “An engaged client understands that performance is best assessed over full market cycles rather than over short time frames,” says MacSymon. “When the client’s expectations are aligned to the attainment of the goals detailed in their financial plan the interim portfolio performance, good or bad, becomes less of an issue”.

Human behaviour has a massive impact on financial decisions and discussions about money and its application can be emotive. Your financial planner plays a calming role by preventing you from taking knee-jerk financial decisions based on short term political noise, market and currency volatility and negative news flows. “It is incumbent on the financial planner to channel the energy and direction of the client conversation toward issues that need to be addressed and to subtly take ownership and control of the professional engagement in the same way that a doctor would carefully provide advice and counsel,” says MacSymon.

This includes knowing when to seek help with complex financial problems. It is important for financial planners to understand their strengths and limitations – they cannot be everything to all clients. The backing that your financial planner enjoys from his or her advice practice is therefore a huge differentiator. “Having specialists within the business in the fields of tax, fiduciary and portfolio management translates into more precise recommendations which can be executed timeously and efficiently, saving clients time and reducing the chance of errors,” he says. “Complex financial plans are most powerful when there is a strong blend of synthesis between the various financial planning components”.

A coach keeps the team focused on the objective of winning; your financial planner keeps you focussed on the long-term financial outcomes set out in your financial plan. “A great way to keep clients focused on the end goal is to ensure they become actively involved in the planning process, using live simulations to illustrate how they are tracking toward their desired outcomes,” concludes MacSymon. Simulations are particularly useful in showing the long-term impact of today’s financial decisions, whether you are planning for retirement or planning during retirement.

The win-win in the client-adviser relationship is for the client to play an active and informed role in the planning process, because an informed client is more aware of the financial behaviours needed to support his or her financial outcomes.