CHRISISM #49 - Financial Planning: Rocket Science or Common Sense?

05 September 2017

Are you on a mission to keep things a simple as possible for your clients or are you on a mission to make things as complicated as you can to justify the certificates on your wall? I strongly recommend the former!

As you will already know from Chrisism#24 (K.I.S.S), I have always been a keen advocate of keeping things as simple as possible for my clients.

Indeed, up until the mid 1990s, financial planning was pretty simple as Life Companies were financial planning – they provided all the products for personal insurances, as well as all the products for medium and long term investments. Then in the mid 1990s new players took to the field and opened the door for financial planning to become a lot more complex.

As a result of these developments, I was on a mission to dumb down financial planning as much as possible for my clients and, to this end, I sought to create a presentation for my clients that put everything I was ever going to discuss with them in relation to financial planning on one piece of A4 paper!

This one piece of A4 paper and its content is what I originally called my clients’ Circle of Safety, but when I saw the light and became a specialist risk adviser, Circle of Safety became the term I used to describe my clients’ personal protection packages. So let’s have a look at the content of the original Circle of Safety document:-

In order to be able to put everything you are going to discuss in relation to financial planning on one piece of paper, it requires you to really bring this thing called financial planning right down to its bare essentials. When you think about it, every single recommendation that you will ever make to your client in relation to financial planning will only ever be designed to produce and where possible maximise one thing and one thing only for that client and/or their family – what is that one thing? INCOME!

Once we have established that producing income is the outcome that every financial planning strategy is seeking, all we have to do is identify the three different client situations in which we are looking to maximise income, namely:-

1) Income during your working life

2) Income after your working life

3) Income for dependants if you die early

As far as the meat on the bones from a content perspective is concerned, you can see exactly what the fleshed out version of the "Circle of Safety" looks like by referring to page 59 of my book "The Risk Workshop!"

I used to find this one pager really effective for simplifying financial planning for my clients and it also provided a great source of reference for client reviews moving forward.  

The Risk Workshop by Chris Unwin

Are you a financial adviser who would like all of your clients to have appropriate types and levels of personal protection? But perhaps you feel you need a more structured and client friendly engagement process?