by Tony Vidler
One of my favourite quotes of all time is by Einstein: “If you cannot explain it simply then you do not understand it well enough” and nowhere is this more true than in providing advice in complex areas.
As advisers move into more complex technical areas there is a strong tendency to become more technically focussed in how they approach client problems. This becomes a barrier to getting client engagement, and certainly becomes a barrier to moving as far as providing recommendations. We see it often enough in holistic financial planning and investment advisory work, but nowhere is it more graphically illustrated in financial services than in the area of advising upon business insurance.
Certainly a business insurance specialist needs to have great technical skill and knowledge in insurance, and a wide understanding of commercial and estate planning issues and structures if they are to be valuable to their clients. There is no doubt in my own mind that the higher the professional development, and the greater the experience in working with business clients, and the greater the experience an adviser has in their own business, the more effective and valuable they become to clients in this challenging arena.
The great advisers that I have seen working in these highly complex fields though have become great by being basic to begin with. Not basic in the sense of having rudimentary knowledge – far from it. However they are basic in how they begin to approach a complex case. They begin with simplicity, and work hard with their exemplary skills and knowledge to ensure the case remains as simple as possible for the client throughout the engagement.
Using business insurance as an example, here is a very short list of fundamental questions that actually get to the heart of the issues and choices quickly.
1. What is your business interest worth to you personally in the way of earnings and capital growth?
2. What is your business interest worth to your family, or your estate?
3. How is that value going to get to them if you aren’t here to manage the transition from equity to cash-out?
4. What are the things that could prevent you being able to manage the growth and cash-out the way you want, when you want?
There you have it.
No lectures…no presentations on solutions or product spiels….no actively disturbing the client with doom & gloom stories or boring statistics.
Such a process demonstrates a clear understanding of where the business is most likely to fit into the clients personal world – it is about creating the life, retirement or estate they want – and then working quickly to understand what has been considered (or not), what has been done (or not) and what needs to be thought about moving forward.
It is about having a conversation centered upon the clients feelings, desires, plans and aspirations. It is never about demonstrating your technical prowess at the front end, it is about demonstrating that you understand the real issues by being able to ask simple questions – and then being able to provide simple thoughts and suggestions on how to begin resolving complex problems.
Great advisers are great because they introduce simplicity and reduce complex problems down to their basic components. They are great because they understand the power of being basic to begin with in an engagement.0