Doctors and Financial Planning

If you went to see a doctor would it be logical or reasonable to expect the doctor to prescribe medication without asking for your symptoms and then making a diagnosis? I would imagine your answer to be “no”.

 In fact I would be surprised if anyone would even want to take advice from a doctor who did not take the time to:

  1. Establish your symptoms (and asking questions around the specific ailment to get a broader idea of your health).
  2. Diagnose the ailment.
  3. Prescribe the required course of action/medication.

This can be compared to a financial planner who:

  1. Establishes your goals and objectives, the lifestyle you want to lead now and in the future (symptoms).
  2. Builds a financial plan to see if these are achievable and what products might be required (diagnosis).
  3. Researches the market and recommends to most suitable specific product (prescription).

Yet my experience is that the financial services industry often seems to start at point 3 – to me this makes no sense.

Also imagine you see the doctor mentioned earlier because you felt unwell and the “prescription” was more exercise and less salt/sugar i.e. you do not take any medication.

Are you relieved there is nothing seriously wrong or disappointed you did not get any medication?
This seems a bizarre question, but there is a parallel here in the financial services industry.  I charge a fee for financial planning as sometimes existing pensions/investments are suitable, but the research still needs to be done to establish this.

Other advisers may charge on a contingent basis, this is where the adviser only gets paid if a financial product is arranged i.e. medication as above is needed.

My experience is that sometimes clients can be disappointed when the conclusion of my research is their existing financial products are fine and they need to pay my fee without any new products being needed.  I can only assume this is a psychological quirk that we feel we need to have something for our money to gain a sense of worth.  But it is also similar to being disappointed as not needing medication in the example above.

Warm Regards


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