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Focused Advice vs. Comprehensive Advice: What is the Financial Planner’s Job?

By Martin Casals Iglesias, CFP

As I have mentioned in some of my previous blogs, I live in Sao Paulo.

Sao Paulo is one of the largest cities in the world. Its metropolitan area comprises nearly twenty million inhabitants, including cities that, over time, have been appended to the urban sprawl, by their own growth. The city is very cosmopolitan, with people from diverse backgrounds. The most striking settlements that influence the city come from the Italians, Japanese and Portuguese. However, the city is not limited to these ethnicities; colonies of Germans, Spaniards, Arabs and African descendants are also present.

It is this variety of influences that makes this city big, gray (very different of what might be called a tropical paradise), and a very interesting place to live.

Client Diversity

Paulistas, people who live in Sao Paulo, naturally understand that people have different characteristics and needs, or as the Spanish writer Ramón de Campoamor y Campoosorio puts it, “everything is according to the color of the lens through which one sees.”

I say this because I believe the diversity of values, beliefs, knowledge and needs, without a doubt, extends to many aspects of life, including finances. People are different, and therefore have different needs and expectations when they expect the services of a financial planner.

There is a commonly accepted categorization of people, according to how they make their financial decisions. The categories are the delegators, the validators and the self-directed. Their needs about financial planning are all different:

Delegators are those who assign the task of taking care of their finances to a third party – usually a financial planner. They don’t get involved in the decisions, but are extremely demanding in terms of time and results, and if well served, they reward with loyalty.

Validators need help from an expert, but they expect recommendations. They make their own analysis, discuss alternatives with the specialist, but at the end of the day, they make the decision.

Validators are excellent customers for financial planners. They appreciate the recommendations and planning processes, but in the end they make sure that the final decisions are theirs. Thus, they don´t demand results with the same intensity of delegators.

Finally, there are the self-directed, who take charge of their financial life, personally. They try to get information. In some ways, they are more likely to consume “financial education”, than financial planning, because education allows them to be independent in decision-making. They are highly price-sensitive and when they seek professional help, in general, it is about a specific and well-defined issue.

What is the Financial Planner´s Job?

We can simply say that a planner’s job  is to offer a structured financial planning process, which by definition, must be comprehensive and take into account all the financial aspects of a person’s life. This response is good, but may limit the scope of the professional.

I would say that the financial planner’s job is to help a client achieve their goals. If we accept this, we must accept that even the so-called “focused advice” is also in the scope of planners.

So, I understand that:

A portion of customers, composed mainly by validators and delegators, has a natural demand for “comprehensive advise”, while self directed financial planners tend to need to resolve issues related to “focused advice”.

Regardless of their profile, we must help people in their quest to achieve their goals. This means, we should have clarity that “comprehensive advise” is the best process, but demands for “focused advice” will come naturally, and we must be prepared to resolve them, either personally or by maintaining a network of experts who enable us to address clients’ needs. These needs are different from person-to-person, and will always be, because people are different by nature, and as Campoamor said, they see the world through different lenses.

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