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Money plans cannot ignore life plans

Some financial advisers are including this approach which involves focusing on their clients' personal dreams and their emotional relationship with money

George Kinder, the founder of Kinder Institute of Life Planning, was in Mumbai recently conducting a session on ‘Life Planning’. The session was attended by many financial planners and advisers who were interested in this approach towards money management. This is a more personalised extension of financial planning (read more about it here: http://mintne.ws/1FKtOBR). For clients, it’s about sharing and acknowledging values that drive their dreams rather than just enumerating financial goals. For advisers, however, it requires a conscious shift in the way they approach a client relationship. If financial planning propagated a shift away from product centricity to asset allocation, then life planning aims at focusing on personal dreams and one’s relationship with money. Here is how some of them are managing.

Changing initial conversations

For Yogita Dand, a Mumbai-based certified financial planner and registered life planner, the shift to life planning began because she felt there was something missing in the money dialogues with her clients. “Everybody has a relationship with money.... This often dictates behaviour around money. I couldn’t understand this before being introduced to life planning. This doesn’t really come up in the financial plan," said Dand.

Kinder’s course on life planning focuses on asking the right questions. The process is referred to as EVOKE: explore, vision, obstacle, knowledge and execution. While the first three are exploratory in nature, the last two pertain to financial planning. Anup Bansal, managing director, Mitraz Financial Services Pvt. Ltd, and a life planning practitioner since 2013, said, “Each client’s reaction is different. Ultimately though clients get involved and it forces them to think about what’s truly important in life." Bansal said that for planners to be successful it is important to invest time in their own skills.

Vivek Damani, founder, Jeevan Prabandhan, a Mumbai-based financial advisory company, also prescribes the life planning approach. “Not all clients are going to be interested in this. But I have realised that personally evolving and including life planning in my life not only helps me but also enables me to engage better with clients to make them more open," he said.

The art of listening

The life planner’s job is to be a facilitator and enabler, but the resultant actions one has to arrive at themselves. Damani said, “Before I did the EVOKE programme, I would sometimes suggest life solutions to clients along with their financial planning. I learnt to listen and probe rather than suggest. Let the client themselves answer the questions."

As life planning borders the territory of counselling, one has to wonder if financial advisers are equipped to handle the softer aspects of life planning. Most advisers we spoke to said that it’s not so much about counselling but about developing your own listening skills.

“A client’s lifestyle doesn’t change immediately to reflect their life plan, it happens gradually. If you listen to what they desire, ultimately it enables you to make them achieve their life goals," said Bansal. This in-depth approach helped Bansal understand that a client was unhappy with his job and wanted to leave immediately. Further discussions helped to make the client understand that this goal had to be worked on gradually, and it might take 2-3 years before he could quit and yet retain financial freedom.

While listening is the key skill, establishing trust is difficult. Dand said, “When I started, it was tough to get clients to share. But listening in the manner that the programme teaches has enabled me to build trust and for clients to open up." Life planning also advocates achieving satisfaction in life rather than tangible outcomes. How does one convey that? Prakash Lohana, a Vadodara-based certified financial planner and life planner, said, “Introducing the concept is difficult. To begin with I have discussions focusing on life planning questions with a few clients. As the trust builds, it becomes easier for them to see what we want to achieve."

This intangibility of the service beckons the question about fees—how does one quantify the effort and time spent by the adviser? Experts we spoke to didn’t have a clear answer but were unanimous in saying that it’s about adding value to the client, and if the client see that, the amount for fees shouldn’t be an issue.

What lies ahead

Sadique Neelgund, chief executive officer and founder, Network FP, an organisation that professionally connects financial advisers and holds seminars on life planning for advisers, said, “A life planner’s responsibility is to discover and articulate the real dreams, aspirations, concerns and fears of clients. Then, through skillful conversations and handholding, help them either overcome or achieve them."

If financial advisers start to focus on the sensitive relationship between people and money, advisory equations will start to become long term and deeper and outcomes more meaningful. This approach to financial planning is seeing more takers with 150 life planners in India.

It may not become main stream very soon but will coexist with other advisory formats.

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