More Bulls**t Jargon on its way?

by Tony Vidler.

Heaven help us...the financial services sector is apparently getting new jargon! Because we need it.

It can only be a matter of time before the new buzzworders suggest we also need new qualifications to qualify for the new buzzword, possibly with a recommendation for new acronyms to describe the new Jargon.

In the last 24 hours two interesting articles appeared on my radar screen suggesting that financial services - or more specifically, financial planning - has some new buzz words now because we need them.

Yeah, right.

In one story I read with interest that "Finology is the new buzzword in US Financial Planning circles". In the other, I read that "financial life planning" has arrived. Dammit....I think I'll have to call myself a Life Finology Planner. Actually, I thought the Financial Life Planning wave was rather late in being reported given it has actually been around for quite a few years now as a school of thought. Nevertheless, I am now reassured to learn that it has in fact arrived.

Finology though? More on that shortly....but it does sound rather like the scientific study of the back end of rockets doesn't it?

Let's begin with the tardy Financial Life Planning that took so long to arrive. Well this is the "core of a fast-growing American financial advice movement that is spreading across the world", and credited to George Kinder. According to one practitioner quoted in the story this discipline is about "connecting money with life rather than sitting down with people and telling them they need to buy a pension". The Financial Life Planner quoted contends that ordinary financial planning consists of planners attempting "to find an individuals secret sorrow".

This intrigued me, as I have never heard - from the hundreds of financial planners, or the many more hundreds of other types of financial advisers that I know who effectively do financial planning work - that the business is about finding someone's secret sorrow. Doing a little digging via Google around the financial planning world didn't reveal anyone focused upon uncovering sorrows or vast regrets for individuals either.

The focus of the Financial Life Planner is oddly enough precisely upon doing what your common garden-variety financial planners say they try to do: ask clients questions and get to know their aspirations, and then helping them to put together a plan that is most likely to help them achieve it.

So back to "Finology"...with full credit to my faithful assistant Google....it seems the founding Finologist is a chap called Richard Wagner, who claims credit for inventing this word. In an interesting article he says that the profession needs this new word because there is no word that describes the relationship between an individual and money in the English Language. What about "dependence" Richard?

Just as an aside; the word "relationship" itself is defined as "a connection, an involvement or an association". So conceivably the apparently missing word to describe a persons relationship with their money is "relationship"? Just sayin'...y'know?

Regardless, Wagner postulates that the profession's progress is limited by the absence of our own vocabulary to describe this link, and the term "Life Planning" is dismissed as being too broad a term to accurately describe what planners do. Ergo: Finology. Hurrah!

What a huge yawn....and that is just for those in the business. It will be an even bigger yawn for consumers.

The questions that arise whenever this sort of nonsense is mooted should be:

1. How will coining a new term to describe an existing professional competency help the profession or the consumers of its services?
2. Who is this term being developed for? (i.e. for whose benefit?)
3. If the new term is to be valid, how is it really differentiated from existing disciplines?

When reading of these latest hot pieces of jargon sweeping the world of financial planning, I could not work out an answer to the first question. Neither of these buzzwords describe methodology or systems or competencies that apparently differ from what good planners - indeed, from what good financial advisers - already do.

The terms appear to be feverishly capturing the imagination of the advisory community only. Or not maybe. But there is no discernible cry for these "different approaches" from consumers, or even necessarily the majority of the advisory community that I can find. It does seem more likely that the driver is advisers struggling to articulate their own value proposition to clients - or desperately wanting to distance themselves from the image of being seen to sell anything.

Hello? You're in business. You ARE selling something. Do you honestly think that a new piece of jargon will obscure that? Even if that jargon is meant to convey you don't "do product" or somesuch?

The broad claim of differentiation between conventional financial advisers or planners and the Finologists or Financial Life Planners seems to be a disassociation from product recommendations. The buzzworders appear to be driven by understanding the real issues that drive human behavior, in order to be able to help behavioral and circumstantial change.

But then not use manufactured products perhaps. (This is not actually entirely clear though).

Funnily enough, the process just described is what you get taught in financial planning. It is also what you get taught in other financial services specialist training. It is what most professional financial advisers do every day with their clients. But you also get taught and learn how to use products as tools. 

Products are merely a means to an end. A New Zealand consumer who wants a fantastic holiday in London may well choose to work with a professional travel consultant. That person will inevitably recommend a mode of transport because even our best triathletes would struggle with the 18,325 kilometer run/swim/cycle leg, and probably not enjoy the holiday part quite so much. So a product (e.g a plane ticket) is often a necessary component of the advice. The advice however is absolutely centered upon how to achieve the goal of the fantastic holiday, and ensuring that the details required to make it work as seamlessly as possible, and to be as enjoyable an experience as possible are thought of and covered.

It is absolutely true that in times gone by - when the industry was young and still thought it knew everything - products were the center of the process. As the profession has learned and improved though, products are secondary. Advice is the key value component.

Financial advice is no different in reality to the example of the travel agent, and it doesn't require new labels or buzzwords or jargon to highlight that. Professional financial advisers do try to know and understand the "soft" issues - the needs, the aspirations, the goals of the clients. Often they have to help the clients actually define those things as many consumers haven't really done it. In putting together plans to help the clients achieve those aspirations and goals, products get used. But the products are tools.

The advice and the coaching make the difference. No matter how you label it.

The story on Financial Life Planning that caught my attention:

http://www.telegraph.co.uk/finance/personalfinance/investing/9319327/A-new-kind-of-financial-adviser-or-a-waste-of-money.html

More on Finology by the very Finologist himself....
http://www.worthliving.com/2010/08/seeding-the-garden-of-knowledge/


Like this?  Then share it with others...or visit www.strictlybiz.co.nz for loads more useful and interesting information.

Single, and loving it.

 by Tony Vidler.

I'd best let you down gently right at the beginning - this is not a gleeful little tale of a single persons interesting life. It is about the possibility of one type of "singledom" for an industry, that can result in more people loving it.

With all the change and raising of standards in financial services in recent years there is a mood that finally financial advice is becoming a profession in NZ. When you drill down into the reasons why people think that is so it becomes obvious that there is a wide range of views on precisely what a profession is.  It seems to be a bit like the Yeti....no-one has actually seen it, and everyone has a slightly different mental picture of what it might look like, yet everyone agrees that they'll know it when they see it.

This begs the question:  How will we know when financial advice has become a profession?

The answer is "when consumers believe it to be".  That may be many years after a profession has actually been created though - attaining market acceptance and associated prestige only happens after the high standards have been adopted and demonstrated continually and unfailingly.

We should acknowledge (and to a degree be pleased with) the fact that in the last 10 years the industry has evolved incredibly swiftly.  In the last 3 years the rate of change and elevation of advice quality, ethical behaviors and fiduciary standards has been remarkable.  Big ticks to everyone involved for that. It is premature for us to claim professional status on an industry wide basis however.   While full professional status has not been achieved yet, the shape and form of the profession IS becoming clearly visible.  That in itself is progress.  But is it yet enough?

Of the many definitions of a profession that one can find, I quite like this:

"A profession is a vocation founded on specialized educational training, the purpose of which is to provide disinterested counsel and service to others, for a direct and definite compensation, wholly apart from expectation of other business gain. This definition implies that, for a profession to be recognized as a profession, it first must be organized within a professional body".

This comes from a paper entitled "The Professions in Society", by Clare Bellis (a senior lecturer in actuarial studies).

If this is correct as I believe it to be, then clearly the industry still has further evolution to work through. Consider the key points, and then assess them against our world today.

Specialized educational training.  Well, to be a profession clearly this area cannot be something which is voluntary.  It is a "ticket to the game".  Everyone has to be at the same standard to be allowed entry to the profession.  We aren't there yet in NZ.

Disinterested counsel. Let's not even go here yet....but as an industry we remain some distance away from universally providing disinterested counsel to all comers.  In time, many issues surrounding potential conflicts, contrasting remuneration models, blatantly vested self-interest - all have to be addressed, and removed or resolved.

Direct & Definite Compensation.  Hhhhm....another one we maybe shouldn't go near yet.  Definitely cannot tick this box as an industry though.  Too closely tied to the "disinterested counsel" issue I'm afraid.

Organized within a professional body.  Aaaah, one of my soap box issues!  How can any profession have a multitude of "professional body's"?  Surely if it is truly a professional body then it exists for the entire profession.  The same standards of behavior, ethical standards, practice standards, educational expectations and so on would apply equally if it is genuinely a "profession".  Once again, in NZ we cannot tick this box at this time.

Yet this last item is the one box that the industry could tick if it chose to.  It is within the control of the industry itself.  Of the 4 core elements to becoming a profession there is one clear path forward - organizing a single professional body.  Any adviser who cares about their professional standing, aspires to have a valuable business in years to come, and wants to contribute to creating better results for consumers generally should be working within their own spheres of influence to bring this cohesion to the industry. 

It makes no sense to leave your own professional standing and brand entirely in the hands of other people.

It makes enormous sense though to work towards "singledom" as an industry.  There is not one adviser out there who wouldn't love it if they were held in full professional regard by the community - even those consumers who had never met the adviser, but respected them simply because of their profession.  Get the industry single, and (folks) loving it.


Like this?  Then share it with others...or visit www.strictlybiz.co.nz for loads more useful and interesting information.

What's in a name?

by Tony Vidler.

...that which we call a rose by any other name would smell as sweet.

Shakespeare raises an interesting line of thought with that quote:  something is called a particular name only because that is what the majority of humans agreed to call it.  A rose could just as easily have been called a "hippo" couldn't it?

What triggered this line of thought on the matter of naming things, or labeling, was an interesting little article about some research done by a firm called Cerulli in the States.  The key finding of this piece of research was:

59%of Advisors perceive themselves as Financial Planners, but only 30% truly offer planning services.

I have no idea of the size of the research group, or whether it checked beyond American borders or anything else, however my guess is that this finding would be largely accurate here too.

In essence, the research asked advisers to classify themselves and their practices on their own perception of the services they offer the market.  The researchers then reviewed those answers against what the adviser practices actually were, and the work that had actually been done with their clients.

Several interesting conclusions arose.  Most advisers seemed to offer some of the elements of financial planning, but then focused nearly all of their efforts on asset accumulation and/or wealth management work.

Also, it is strongly implied that many advisers aspire to provide in-depth or comprehensive planning services, but the majority of their retail clients are not necessarily in need of such services.

Thirdly, it highlights the ongoing confusion amongst clients AND advisers over the industry terminology and titles.

Certainly there is nothing inherently wrong or unethical about calling oneself a financial planner (for example), if one is qualified to use that label and is offering financial planning services to consumers.  That is not at issue at all.  It is irrelevant whether the consumers use the full range of such expertise or not really, if the adviser has the expertise and is offering it.

I do wonder though whether an adviser is giving them-self the best chance of capitalizing on their core value proposition in the consumer minds?  That is, in their branding are advisers linking their expertise and value to what the consumer thinks they want or need?

The essence of appropriate labeling, or naming of anything, is surely to convey an image which is immediately understandable to the target audience.  We continue to call a rose a rose simply because that is accepted, understood by the majority, and instantly conveys an image to the person we are communicating with.

In other words, it works as a form of communication.

So professional advisers might need to re-consider how they label - or brand - themselves.

Despite the many years of work that may have gone into earning the right to be called a Financial Planner (or any one of a number of other suitable professional qualifications), and how much distinction there might be within the industry in using such titles or qualifications, it may actually be largely meaningless to the target market.

It is all well and good to comprehensively explain to an audience that this pretty thing with a nice aroma is a typical example of the Rosaceae family.  It is completely accurate, clearly imparts that you have some specific knowledge of the subject, and sounds very clever.  

But do people get it?  More importantly, will they want one?


Like this?  Then share it with others...or visit www.strictlybiz.co.nz for loads more useful and interesting information.