Goals-based advice is not a new phenomenon. Financial planners have been relating advice back to a client’s goals and objectives for many years. There are, however, two sides to this story. Consumers see it a little differently. Based on extensive research and outcomes of the Royal Commission, they feel in many cases, goals are linked closely to product sales and that financial planning is largely focused on products, not them.
The solution is to shift focus. We must anchor a client’s goals at the heart of the advice process, so let's unpack the multiple layers of goals-based advice.
There are three parts to GBA:
1. Goals Discovery - the conversation that draws out the client’s goals, dreams, values, and aspirations.
2. Goals-based Advice - this is the technology and modelling that sits behind the customer experience. It explores goals, what-ifs, trade-offs and advice strategies to improve the client's goal achievability as the measure.
3. Goals-based Investing - this is the “goal risk tolerance” methodology that allows individual or bucket of goals to have their own risk tolerance and investment asset allocation, rather than the traditional “one-size fits all” approach.