For many years, the butcher, the baker and the candlestick maker were stalwarts on our high street. And for anyone looking to set up a pension or life insurance policy, the financial broker was a mainstay too.
In my field of Wealth Counselling my clients and I examine the intersection between money (wealth) and the internal experiences (the psychology) of the individual.
But recently I have been having interesting conversations with people who are closely aligned with the financial services industry. Some of these conversations have got me thinking about how the responsibilities on the shoulders of financial advisors are changing.
Money is never “just” money
Whether we’re looking at notes and coins in our wallets, or at our financial apps and cards in this increasingly cash-free world, money is always about more than money.
Our money is one of the chief enablers in our lives.
Maybe we have a goal to send our children to an exclusive public school. Or we desire to experience a luxury five star yacht trip along a picturesque coastline. Money will help us realise these dreams.
Even with our more prosaic immediate needs of just popping into the corner shop to buy bread and milk requires money.
And, of course, money also has a big role to play in the dreams we have for our futures.
Pension, life insurance and… now more
This is often the starting point for speaking with a finance professional.
Let’s take a look at the pension example first.
If you were discussing setting up a pension with a broker, it’s a good bet that you were thinking somewhat about your future.
Likewise with a life insurance policy. You’ll be looking to mitigate as much risk as possible for any potential future unexpected events that could have a negative impact on your loved ones.
In these instances in the past, the finance professional you were dealing with would take you through a thorough process that involved finding out about your current financial standing. Your income and expenditure would be closely examined, number crunching would go on and the broker would present options to you that fell within your affordability level.
I don’t mean to oversimplify in the description I provided.
The financial services industry has been heavily regulated for a long time, and there are specific codes of conduct financial brokers have to meet.
But much of the discussion between a broker and a client, even if they went on to build a long-term business relationship with each other, used to be driven by numbers.
That has changed.
Financial advice at a pivotal moment
The financial industry is reporting that they are frequently expected to understand the nuances and complexity going on in their clients’ lives when advising on monetary matters.
This makes sense in many ways.
As we’ve already discussed, no one is buying a pension “just because”.
Understanding how a client envisions their retirement years is a key element to knowing how best to advise them.
However, a new report released by Charles Stanley financial advisors has also highlighted that this professional cohort is reporting that they are required to support their clients emotionally when dealing with financial matters.
As a psychotherapist, this finding has given me pause for thought.
How does a financial advisor know what to expect?
Imagine if a financial advisor asks a client a question about a sum of money they want to invest, and they receive a response that is deeply steeped in emotion.
Perhaps the question is around who the beneficiaries should be on the policy, and the client shares that they are estranged from two of their three children.
This suddenly introduces a completely different energy and set of requirements in the room.
How does the broker handle this? Simply following up by asking a question around income and expenditure is not the response the client will expect. And, if this individual is in distress, not responding in an unintentionally careless way could have serious consequences.
That’s just one hypothetical example. We can think of many others.
I like that the finance industry is evolving.
Innovation and constant refinement of how you offer customer service is a recipe for success no matter what industry you are in.
But I have a concern that financial brokers are being expected to moonlight as psychotherapists.
This places an undue pressure on their shoulders. And also leaves clients sharing potentially more about their personal lives than can realistically be handled in a conversation with a finance professional.