The standard six-step financial advice process

Is the standard six-step financial advice process the best option for clients and advisers?

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Many advisers are comfortably familiar with the six-step financial advice process because it provides a useful framework, however, some advisers are now questioning whether its popularity is due to its suitability from a compliance perspective rather than how well it enables clients to reach their goals. The standard six-step financial advice process is:

  • Establishing goals and a relationship with the client
  • Gathering data
  • Analysing data
  • Developing a plan
  • Implementing the plan
  • Monitoring the plan

The six steps initially appear sensible and simple to follow but advisers who are critical of the process believe it’s flawed because of its implicit assumption that clients are rational decision makers.

Clients are not always ‘rational’

Many clients will not make rational decisions. They will also not be able to clearly explain and prioritise their goals. This means the process can fail at the first step because the adviser does not understand their clients’ goals. Advisers who have not been able to get their client to clearly express their goals may simply adopt the default position of trying to maximise the client’s wealth. Generating greater wealth is often not an explicit goal of a client although it may well be a contributory factor helping the client to achieve their goals.

Clients are often not emotionally equipped to engage with, assess and make decisions about financial matters, in a manner which fits neatly into the financial planning process. This means it isn’t your marketing material, pitch or your factual financial needs analysis process that will drive successful engagement with your clients. Nor will it be your businesses mission statement, your client value proposition, the cut of your suit or the quality of your office furniture. Instead, you need to engage on an emotional level and ask questions which uncover what your client’s true goals are.

Clients are often not rational in relation to how they envisage their future financial state. The adviser’s role is to make the client realise how they need to change their behaviour – in short, make them acknowledge their irrationality. This is not always easy as clients may be in a state of denial. While no one wakes up in the morning or has as their daily mantra ‘I am deliberately avoiding dealing with my financial past, present and future’, some clients unfortunately behave as if they are being wilfully blind to their financial future – and it’s the adviser’s duty to change that outlook.

Disengaged or irrational?

Rather than a client being irrational, it could be that they are disengaged with the advice process. This can happen because of an inability to cope with complexity combined with choice confusion, herd mentality, social proof (which is when people copy other people’s behaviour if they are unsure of how to behave), an inability to look forward, to plan and a lack of understanding of basic and fundamental financial concepts like compound interest and cash-flow management. Regardless of the client being irrational or disengaged – an adviser needs to uncover which it is and then use a technique which will work for that type of client. The way you understand and manage your clients and their emotional responses will determine their willingness to engage with you.

The six steps can be laborious

The six steps do not really tap into what clients want in a psychological and behavioural context. Moreover, the amount of time spent on the first step of the process can be less than optimal because advisers need to move through the other steps and are often time poor. The traditional six-step process is compliance centric rather than a client-centric process. A good client-centric process must still, of course, be compliant but compliance requirements should not dominate.

What alternative processes are there?

The process needs to be relevant and delivered with efficiency and meaning. While every adviser will need to use a process that meets all necessary compliance requirements it also needs to suit the personality of the adviser, so they deliver it persuasively, otherwise clients may feel the adviser isn’t authentic.

An alternative is to adopt the four-step process shown below which is designed to form an emotional connection with the client.1

  • Feels
  • Details
  • Overview
  • Process

Looking at these steps in more detail:

Process stepTypical questions or explanations
Feels Our clients are…
The challenges they face are…
Working with us they have achieved…
Our clients feel…
Details This means we deliver solutions, such as…
The cost of our advice is…
Overview Our solutions work because…
The big picture of our advice looks like…
Process The way we deliver our solution is…
We apply these steps to all our clients because…

Using a process which prioritises client engagement will generate more referrals

Using a process which the client understands and feels engaged with is more likely to lead to referrals because the client can explain to their colleagues and peers (your potential referrals) what the process they have been through is and how it has helped them.

Advisers need to find the best process which both suits their personality and is compliant if they wish to maximise their ability to attract and retain clients. Pushing more compliance into the process doesn’t serve the needs of clients and makes it likely they will become disengaged. Instead, the process needs to keep the compliance elements in the background and bring emotional connection with the client to the front and centre.


1  This process was developed by Andy Marshall and is described in his book: Client Engagement for Financial Advisors: A handbook for the modern wealth advice professional. His book can be purchased on amazon.