Feeling a sense of empathy with clients is key to success
One key skill required by final-round judges for the SCMP/IFPHK Financial Planner Awards 2009 was the ability to think like a client. Not just any client, of course, but specifically like a middle-aged divorced mother of one with job security concerns, little disposable income and a patchy record of personal investments.
This was the hypothetical, yet representative, central character in the case study set for the three finalists and, therefore, the person whose viewpoint each judge had to assume in order to assess the style and respective merits of the different presentations.
'I tried to look for human elements in the plan and the extent to which the financial planner appreciated the client's situation,' said Alan Tsang Hing-lun, director and chief executive of AMTD. 'In particular, I was not looking for the technical textbook approach, but for evidence that the [contestants] took on board the difficulties and challenges faced by the client in everyday life and her discomfort and limited experience in making financial decisions.'
Emphasising that the ability to appreciate different outlooks and individual client priorities was the basis of sound financial advice, Tsang said that all three candidates had put a good case in terms of tone and manner. 'I was impressed and pleased by the overall effort,' he said.
Michael Huddart, Manulife's chief executive in Hong Kong, was similarly clear about his own objectives as one of the judging panel. One could more or less take for granted, he indicated, that the initial written submissions would be of a high standard and cover most of the main issues. What he wanted to see, though, in the oral presentations was a sense of empathy with the customer. This meant taking full account of the pressures and constraints that existed, and proposing solutions that were workable and acceptable.
It was also important to avoid lapsing into industry jargon and ensure that answers addressed actual concerns. Investors needed options and information, not general reassurances or replies that only led into new layers of complexity.
'You need a good Q&A session to test this,' Huddart said. 'In this case, for example, you can't forget about the brother's advice or what would happen if the ex-husband died without any life insurance. You want the reasoning to be sensible and take off marks if they miss risks. In general, though, the finalists showed they were empathetic and their advice was appropriate.'
As in real-life situations, what mattered most was devising a strategy that suited the client and their evolving circumstances. The choice of specific products followed on from that and had to balance personal aspirations with predictable needs over different time horizons.
'The crisis has made people aware that just going for hot funds is not so good; they are taking a more long-term view now,' Huddart said. 'There are many possibilities, but they must be well explained.'
Mary Huen, head of consumer banking for Standard Chartered Bank (Hong Kong), was especially encouraged to see that each candidate had demonstrated a holistic, analytical approach to financial planning. They had also come up with recommendations that appeared realistic and achievable given the client's income and prevailing market conditions.
'The most impressive candidates are those who are professional, yet easy to follow and understand,' she said. 'It is very important for them to show they understand the customer's needs and objectives, and to be able to provide solutions addressing these objectives.'
She hinted that there was still a tendency for less experienced financial planners to complicate rather than simplify. This did not help customers who wanted clarity and a reasonable degree of certainty about the purpose of different types of investment and the returns to expect over specific time scales.
'The financial plan should always be structured in a manner that is easy to read and understand, avoiding too much complexity,' Huen said. She added that the continued success of the awards was having two beneficial effects. On the one hand, the competition is helping to set higher standards of professionalism and create higher expectations of the financial services sector. On the other, by encouraging that kind of continuous improvement and promoting ethical practices, it is also attracting new interest among potential recruits.
Considering this broader picture, AMTD's Tsang said that since the collapse of Lehman Brothers, financial institutions had been more alert to the quality of the selling process for investment products. Even so, there is still an opportunity for the IFPHK, as a professional body, to 'stand up and use its voice'. There is a duty to keep reminding practitioners and members of the public about best practices for selling financial products and to play an active part in ensuring training programmes are comprehensive and up to date.
'The IFPHK is not a government body, unlike the [Securities and Futures Commission] and [the Hong Kong Monetary Authority], so the extent of the changes it can trigger may not be as much,' Tsang said. 'But I think they have done a good job in promoting financial planning and the competition has [contributed to] that progress.'