Some job titles are so obvious that it needs little explanation.
A salesman makes sales, a gunman makes guns and a deliveryman make deliveries.

And a Batman bats?

Naturally, we assume that all Financial Advisors (FA) dispense valuable Financial Advice. That is not the case. Like every job out there. some people are simply not doing their work properly. Just look at our plummeting birth rate to see the stellar work that the folks at Ministry of Social and Family Development are doing.

Hence, our epiphany!
Financial advice is uncommon and only competent FAs are capable of providing it.

Why we have exceedingly high expectations

When it comes to the word “advice”, we take it rather seriously. After all, most occupations that are advisory-based are well regarded and respected – accountants, solicitors, medical practitioners, etc. These professionals deliver high-quality advice to their clients constantly.

In the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd, it is established that professionals are held accountable for the advice that they render if the one receiving it is reliant on it. This sets up the stage for negligence suits against doctors, lawyers, accountants and pretty much anyone who renders advisory services. Financial advisory service should be no different. In fact, a financial advisor who has rendered wrong advice can be sued in Court too.

That is why we feel that proper financial advice is not easy to come by and can only be dispensed by professional Financial Advisors.

Before we reveal what financial advice is, let us go through what financial advice is not.

General information doesn’t suffice

It is great that your FA is giving you a comprehensive explanation of how the different financial instruments work. It will be even better if he is able to clear all your doubts quickly with easy-to-understand examples.

Financial advice should not be something that you can Google and find on your own. It is not general knowledge. It must be more than just that.

Product specification isn’t advice

Your agent may be able to provide specific information on a product that is not found online. He may be able to provide Benefit Illustration, Pricing, and other small prints. He may even be able to compare the product that he recommends with similar ones out there.

But that is simply product information. In some cases, it is just product pushing.

It may be quite helpful to you as it assists you in your decision making but that alone is not financial advice.

A calculator is merely a tool

Likewise, having a needs analysis alone isn’t Financial Advice.
There are many financial calculators out there (and we do have a neat one) that one can utilize.

A technical analysis and result reporting is a useful tool indeed. However, it is built upon a set of presumptions that is decided by the creator. It does not take into account your preferences at all (i.e. your forecast of inflation, your prudence level, etc).

What is Financial Advice then?

It is simple to provide general information.
It is easy to churn out Benefit Illustration.
It is definitely not difficult to recommend a default set of financial products to every client based on financial calculators.

What is hard to do is to provide a bespoke Financial Advice that fits you perfectly.
In order for an FA to do so, he must understand you well.
Well beyond what is required in the Know-Your-Client form.

Your Financial Advisor takes measurements and makes sure the final product fits you perfectly

He has to understand your current financial situation, risk appetite, life goals, priorities and even your family well. In addition to asking you questions, he also has to observe your answers. He has to internalize everything he knows about you and formulate them into actionable recommendations.

You may ask,
Why is that difficult?

Financial Advice is an elegant combination of science and art

Or as Cal Weaver describe, it is a perfect combination of sexy and cute.

The science part is rather obvious. You have a certain amount of savings, income, expenditure, dependents, etc. Technical analysis will leave a set of figures that the FA can present to you.

The non-scientific part – less so.

The FA must listen carefully to every sentence you are uttering. It may happen before the financial consultation session even starts. He learns about what you value, what are your immediate and long-term goals and your actual risk inclination (as opposed to your stated one).

To illustrate the point, you may think that you are a risk-averse individual who values early retirement by way of financial independence. Through informal conversation with you, your FA may come to understand that you love buying penny stocks and you also prioritize family building over financial freedom.

Like an artist, your FA must be able to follow his intuition at times so as to craft a perfect plan for you.

Final Words

Proper financial advice is not just about the general financial know-how, product information or number-crunching. If that constitutes financial advice, visiting us is all you need to do.

Financial advice is putting all these and more together and providing tailored recommendations to each individual.

An FA who is able to achieve that is a great one.
He knows when to shut up and listen, what he should look out for on your behalf and how to provide recommendations that you will gladly accept.

If your financial consultant is able to do these, don’t let him or her slip away.
Otherwise, let us know and we will have a great one knocking on your doors in no time!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.