The new normal (Guest Blog)



This is a guest blog by Roger Portnoy.

If there is one clear message that is emerging from Covid-19 that advisers should recognise, it is that the world that we will see tomorrow, will be shaped by a new set of unexpected and probably for most, unexplored conditions. Of course, this is not that “radical” a consideration, but the actions initiated by governments around the world to contain the spread of Covid-19, and protect their most vulnerable citizens from its potential lethal effects has:

1) Presented many people with an opportunity to experience home life with their children, partner and friends (depending on one’s situation) in a way that probably for most represents a new perspective. There is always, esp. in the media, the tendency to suggest that the lockdown will generally highlight the negatives, rather than the positives in individual relationships, but this doesn’t always end up being the case.

2) Given us a healthy glimpse of what a healthier planet looks like when we aren’t all expending our energies on production and execution. The satellite images that one sees show how even a rather small “pause” in our daily human activities can have a powerful and cleansing effect on the environment creating the opportunity for a better quality of life for all.

3) Allowed people to look at the way they work, and the value they acquire from aspects of their work in different ways.  The lockdown has brought for many the opportunity to experience a different way of working without severe consequences.  This may lead to companies large and small (in certain industries) looking at their “offices complexes” in new ways, as well as adopting and sticking to new working practices in different types of remote environments.

4) Provided many companies and businesses with a fresh perspective on how policies may evolve in times of significant mortality risk and what actions they need to be able to take, even in scenarios where the govt intentions are highly protective in nature.  One may be right to suspect that the actual processing of good intentions is not quite as simple in a “free and open” economy as one might think, and that unfortunately one needs greater reserves, resilience and perseverance to survive.

I am sure that there are many, many other consequences but, if one is in the financial advisory business, what they absolutely should be conveying is that

1) Regardless of the consequences of Covid-19 on net worth, temporary or permanent, a good adviser will want to engage to share with their clients how they see the new landscape.

2) Advisers will have a real opportunity from Covid-19 to expand the reach of their conversations beyond strictly financial discussions to include dialogues focused on lifestyle, career, family and broader sustainability. I am completely aware that holistic planners will already be executing this, but there is reason to believe that the events of the past few months will have introduced a whole new perspective that needs to be heard.

3) Clients may have recognized that they should and will adjust their expectations, as well as their priorities in terms of life goals. Events like the one unfolding have a strong tendency to be the fragility of life, even one’s well lived, into perspective, and can thus act as a major shock to one’s view on their own life choices.

In the “new normal” holding these types of discussions and applying them regularly into the financial planning as well as investment decision process, will become a large portion of value that advisers give to clients as well as how they “get paid”.  The best way that I can see advisers equipping themselves to thrive in these conversations can be summarized by recognizing

1) That developing a strong ability to coach and mentor is a critical aspect of the interaction process with clients. The way this gets executed should consider various client attributes, including their knowledge, financial confidence, goal priorities, and their planning approach.

2) That advisers who can gain deeper insights into how cognitive biases shape key functional inputs into decision making such as judgement, composure, and management will find themselves better placed to align the planning process with the right execution approach for each individual client.

3) That more than ever, it is critical that advisers really understand which external influences will play the greatest role in shaping priorities and objectives, and what level of susceptibility each client will have. The way that these influences are likely to achieve their objectives will inform the adviser on how he/she should interact with the client.

Be-IQ, one of my fintech investments, created by Mike Free and Neil Bage, created their Behavioral insight system, made up of client facing BEAM, and adviser facing BEACON to empower advisors to start equipping themselves better for these types of conversations, and to develop holistic financial plans that incorporated a client’s behavioral characteristics into every aspect of the dialogue.

The system isn’t yet a complete solution for all aspects of truly holistic financial planning, but it represents a great starting point for those keen to move from relying on innate and intuitive suspicions to one where absolute and quantitative measurements are available to inform, and educate.  Within the framework, the system delivers plenty of delight, curiosity, exploration and discovery for both the adviser and client and thus will stimulate new and exciting conversations aligned with “our new reality”.

I strongly suggest advisers check out, and the individual sections for BEAM and BEACON and see for themselves what’s on offer, and how one can start using the system.