Skip to main content
Personal Finance Professional – setting standards and guiding the profession - return to the homepage Personal Finance Professional logo
  • Search
  • Visit Personal Finance Professional on Instagram
  • Personal Finance Professional on Twitter
  • Visit @PersonalFinanceSociety on Facebook
Visit the website of the Chartered Insurance Institute Logo of the Chartered Insurance Institute

Main navigation

  • Home
  • News
  • News analysis
  • Features
  • Study room
  • Opinion
  • PFS Radio
  • Digital magazine
Quick links:
  • Home
  • Personal Finance Professional Issues
  • SPRING 2021
Opinion
Advice process

President's opinion - Sarah Lord

Share on
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print
Open-access content Friday 12th February 2021
web_p50_final-portrait-2.png

PFS president Sarah Lord shares an equation to summarise financial planning and the key role relationships play

 

After the first lockdown, both my children and I were hoping that home schooling was a thing of the past, but here we are again. I have always admired teachers for the role they play in children’s development but now I have nothing but total and utter respect for what they do!

My five-year-old recently asked me: “What is this financial planning thing that you do?” Admittedly, explaining the complexities of what we, as a profession, do to a five-year-old was always going to be tricky – but it did demonstrate to me the importance of financial education at school. Without the right foundations of knowledge of money, it is an uphill struggle to grasp the importance of having a financial plan during adulthood.  

Simple planning

So, the best way I could find to explain financial planning to my child was to borrow the ‘financial planning on the back of a napkin’ explanation from David Jones of Dimensional Fund Advisors. It eloquently simplifies financial planning to a level that everybody can understand. This explanation was fresh in my mind because I had the pleasure of joining Mr Jones for a PFS Power event in January, where he also examined the importance of the knowledge that we have and the relationships we hold with our clients.

I believe we need to focus much more on how we transition the relationships we have to the next generation of financial planners

Client relationships are at the heart of what we do as individuals and in our businesses; without these relationships, we as financial advisers don’t really have much but our knowledge. That is why when we consider the sustainability of our profession, I believe we need to focus much more on how we transition the relationships we have to the next generation of financial planners, particularly given reports that one in five financial advisers plan to retire in the next five years.

It is my view that transferring a client relationship cannot be done in one meeting – there needs to be a plan in place for transition, which first starts with matching the client with the right financial planner to take the relationship forward. It is also vital to recognise that it takes time for the next-gen planner to build up their own relationship with the client; and importantly, for the client to build up the same level of trust that they have placed in their financial planner for a number of years. Businesses need to be planning relationship transitions over a period of two to three years if the relationships are to be maintained.

Finally, when considering the question asked by my son, I leave you with the equation for financial planning that Mr Jones of Dimensional has devised:

FP = (Ka + O)r

FP = Financial Planning, K = Knowledge, a = application of knowledge to solve our client’s problems, O = Organisation of the finances & r = relationships.

Through this simple equation we can demonstrate the true value that we bring to our clients through the financial planning we deliver. Put simply it comes down to raising everything we do to the power of our relationships.

Sarah Lord is president of the PFS

PFP_Spring2021.jpg
This article appeared in our SPRING 2021 issue of Personal Finance Professional.
Click here to view this issue
Also filed in
Opinion
Advice process

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Today's top reads

BECOME A MEMBER

BECOME A MEMBER

SUBSCRIBE TO PRINT

SUBSCRIBE TO PRINT
PFP
​
FOLLOW US
Twitter
LinkedIn
Youtube
CONTACT US
Tel: +44 (0) 20 7880 6200
Email
Advertise with us
​

About the PFS

About us
Membership
Qualifications
Events

PFP magazine

Digital magazine
Podcasts
Blog
News

General Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Write for PFP Magazine
Want to receive PFP Magazine
Not a member but interested in knowing more? Click here.

© 2023 • PFP Magazine is published by Redactive Media Group. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ