As part of my masters dissertation last year, I attempted to discover the value that clients placed on the intangible elements of the financial planning process. Those elements such as ‘peace of mind’ and ‘financial well being’.

    While I think most practitioners agree that the work we do has a significant impact on clients on a psychological level, as well as a monetary level, it is often difficult to quantify how much these outcomes of the financial planning process are valued by clients.

    Keeping up with the Joneses

    The research I conducted suggested that people’s level of overall wealth has relatively little to do with how they perceive their own financial wellbeing and that people’s perception of their own financial heath is far more to do with other factors such as their upbringing and their peer group. For example, the least wealthy participant in my study actually gave themselves the highest score for ‘financial wellbeing’ and this was driven primarily by their past experiences with money and their perception of their peer group. Financial planners have a vital role to play here in providing reassurance and keeping clients focused on their own plans rather than ‘keeping up with the Joneses’.

    Most of the participants reported a significant uplift in their perception of their own financial wellbeing as a result of the financial planning process. It seems that just ‘having a plan’ can create a significant positive improvement in the way people feel about their financial lives, despite the fact that having a plan in itself does not mean that anything has actually changed.

    Cashflow modelling

    One of the other key elements of the financial planning process that really stood out for adding ‘intangible value’ was cashflow modelling. While all of the study participants acknowledged that there were some shortcomings of any cashflow modelling system, especially the assumptions used, they felt reassured because they had a ‘road map’ to follow and could ‘course correct’ in the future if need be. They saw this as far better then having no plan at all and then getting caught short in the future.

    The main takeaway from my research was that clients value the advice we provide, and that this ‘value’ extends far beyond the ‘investment returns’ and ‘tax savings’ that we can generate for clients (no matter how attractive they might be).

    We are sometimes the only person a client can turn to for advice on financial (and non financial) matters and in some cases, my clients turn to me before they discuss something with their wife!

    The moral of the story is, we should not forget the intangible value we provide to clients each and every day. Given the often long-term and in-depth relationships we have with our clients, perhaps the financial planning profession is uniquely placed to play this role in our clients’ lives. No matter how high the investment return generated or the amount of tax saved, based on my research, I am willing to bet that clients appreciate a whole lot more about their financial planner than just those financial gains!

    Start the discussion

    Add a comment