The Architect & The Engineer
The more you speak with clients about their goals, what they want their life to be like, the more you start to recognise patterns in certain questions. Of course, each and every person's journey, priorities and goals are different. There are however themes in the questions that come up. Differences in answers and responses that you can't help but notice. The contrast between a response of a completely engaged nod, or a look of slight indifference. I've found understanding the framing of these questions is crucial to getting to the heart of the issue and opening up a dialogue on what the real question is.
When someone approaches a Financial Planner it is usually because there is a 'pain point' with their financial position and that is often by its nature technical. One of the many and endless quirks of one of the world's most complex tax positions. Or perhaps sometimes just a general feeling of a ‘lack of control' with their finances. After all, our education system prepares us all terribly for a life of handling our personal finance. Combine that with the endlessly busy nature of family life, it's no wonder the concept of both learning and controlling family finances can seem daunting.
The Engineer
As a Financial Planner, the exams and your technical expertise are pretty much exclusively based on the engineer 'technical' aspect. For example, how does the Tapered Annual Allowance work and why do I have a tax bill? What is the 'best pension?'
These are technical by nature, require analysis and the answer will be akin to that of a mathematical response, mixed with some judgement. There's unlikely to be a huge outcome in responses between various Financial Planners as long as they are competent. The problem with these answers though is that they rarely actually provide a satisfying answer on their own. If financial security is a feeling as much as it is a number. Then an engineering answer gives you part of the number but none of the feeling.
When 'engineering questions' are addressed in isolation they tend to result in a temporary fix. Or that person coming back in a year with yet another 'engineer question.’ Another technical question to be addressed with a technical answer.
The Architect
As the name suggests here, these questions are more about design and structure beyond a single issue. They are much more expansive and deeper questions. They require a far more comprehensive understanding not only of the family's personal circumstances but also their goals, what they want to achieve. If financial planning was the process of designing the life you want to lead, 'the architect' questions are the key to starting the blueprint.
It also takes longer to address these types of questions. After all, who actually knows what their goals are? We all intuitively understand that we have core values and things we want out of life however if someone asked us directly, it would probably take quite some time to articulate. This is a process that involves asking the right questions in the right way. Although if done correctly, it can uncover a strategy that is incredibly valuable as it speaks to the heart of what is important to you.
Working back the 'whys'
The one thing I can promise you though is while the initial question may well be a technical one. This in itself is unlikely to provide a feeling of financial security. The reason this is important to distinguish is generally most 'engineer questions' lead to 'architect questions.'
For example, let's go back to the Tapered Annual Allowance question but let's work through the 'whys’:
"I need to sort my Annual Allowance position"
WHY
"Because I'm worried about how it will affect my pension."
WHY
"Because I want to make sure I have enough to retire."
WHY
"Because I've worked hard and I want to make sure my family and I are going to be ok."
To steal from Paul Armson there really are only a few questions that are asked of financial planners, although it is incredibly rare they are said directly:
Am I going to be ok?
Do I have enough?
Why the type of question matters
The reason why it's SO important to work through the whys is that if you can do this in an open and transparent way. The value of real financial planning becomes crystal clear. It is not about answering a technical issue in isolation. It's about addressing the wider issue of - are we doing ok and do we have enough? It's also ensuring that both client and planner understand that this is the shared goal and the purpose of the conversation is to make sure your life is the one you want to lead.
Almost all purchases are done on the basis of how they make us feel. You don’t buy a nice car because it goes 0-60 mph in 4 seconds compared to 6.7 for your last car, you buy it because of how it makes you feel when you drive it. You don’t go on holiday to get on a flight and go to a hotel, you do it so you can relax and de-stress. The end feeling in the service really is the value and it’s no different in financial planning. In research from the International Longevity Centre called 'Peace of mind: Understanding the non-financial benefits of financial advice.' Unsurprisingly the main findings were people who take advice are more confident and better prepared. As well as advice improves financial literacy, confidence, and delivers greater control, reassurance and peace of mind.
Although not all financial advisers deliver these less tangible benefits equally and this is something to be aware of when making that choice. Let's say you require some advice on your pension. A financial adviser who answers only 'engineer questions' could give you an absolutely perfect recommendation on a technical basis....but completely fail to have understood that actually, you would love nothing more to change your hours and go part-time so you can spend more time with the family. Or, that the concept of retiring fully at age 60 is the very last thing you want to do. Each strategy would require a completely different approach for that individual and while cost and tax savings are pieces of the blueprint, unless the ‘architect’ questions are properly addressed, the design could be entirely wrong.
After all, of course, any good Financial Planner can answer a technical problem. That's part of why we're here at the end of the day however it's not where the real value lies. Financial security is as much about how you feel on a day to day basis. The truth is most of us walk around with an underlying low level of anxiety about money. In my view, the key to good financial planning is to make sure the questions are deeper than just a technical answer. Simply put, you want to ensure the plan is designed to fit YOUR ideal lifestyle. This can be uncovered, quantified and coached but the answer ultimately has to come from you.
So when you are thinking about your finances. The question for you is - what question are you really asking?
