Katherine Hunt: [00:00] There’s quite a few very powerful questions that we can ask for the startup client relationships and when I meet with financial planners to film them to include them in my courses, I often ask them, “Can you tell me three powerful questions that you ask to clients?” Because most financial planners have [inaudible 00:00:15] and what I challenge financial planners to do is to develop 36 unique, powerful questions and to hone it from there.
Fraser Jack: [00:29] Hello Fraser Jack here. Welcome to the goals based advice podcast where we have conversations with pioneers of the new world of financial advice. Thanks for tuning in today and thank you to our supporting partner advice intelligence for powering this podcast. To get a demo of their financial advice software go to adviceintelligence.com. A quick shout out to some great feedback that I’ve had throughout the series. I appreciate your comments and thoughts and ideas and thanks to everybody who has left a review on your online platform of choice. If you feel like you’re able to get any value out of this podcast then please also share it with your colleagues and I look forward to bringing you more episodes.
Fraser Jack: [01:10] In this episode I chat with Dr. Katherine Hunt about her work at Griffith University. Both lecturing and a masters of financial advice and her exciting academic research she’s been doing on subjects like client engagement, client relationships and risk profiling. We also dig a little deep into what she calls powerful questions and how to systemize your client engagement. I got a lot out of the conversation and I know you will too. Let’s kick it up right now. Welcome to the show Katherine.
Katherine Hunt: [01:48] Thanks so much for having me Fraser.
Fraser Jack: [01:50] Good to have you there. Tell us, I can actually see you but nobody else can but you’re enjoying maybe some time off on a hammock at your house?
Katherine Hunt: [02:00] Absolutely. At this time of year I find it’s a little bit too hot in my house, so I just take my laptop and hop into the hammock outside.
Fraser Jack: [02:08] Perfect work life balance that one. Now do you want to give us a quick overview of yourself and what you’re doing at the moment?
Katherine Hunt: [02:15] Yeah, for sure. I’m a lecturer in financial planning. I teach the final three capstone courses of the masters of financial planning at Griffith and another part of my job of course is doing research which is, in some ways a little bit more sexy than the teaching side but, they’re both really fun. Yeah, that’s what I get up to these days.
Fraser Jack: [02:37] Excellent and now let’s go back in time and workout out and have a chat about how you got to that place because when I first knew you, you were a financial advisor.
Katherine Hunt: [02:47] Those were the days, the good old days. Who knew that that experience would be so valuable now, now that I teach in that space. I studied my first degree at uni in psychology and I absolutely loved studying psychology but of course psychology, it gets a little bit too fine grained when you continue with your education in that space so I finished that degree and then I did commerce and financial planning and of course within the first semester I was talking to professor Mark Grimble [inaudible 00:03:22], in fact, who is the man of the hour these days in financial planning and he said, “You know there’s jobs in financial planning.” I thought, “What, you can actually pay me to do this amazing stuff? No way. Wow. Okay.” I interviewed with a few firms and all of them wanted me, why did they want me? Not because I was a student of financial planning but because of my psychology degree, which just about blew my mind because you can imagine a little commerce student thinking, “But I’m studying commerce,” but no, it’s those people skills that they’re actually interested in.
Katherine Hunt: [03:58] I had five years with a supplier financial planning in Broadbeach as a financial advisor. Then of course I wanted to do my PhD, so I wiggled off to Europe for a few years and then came back.
Fraser Jack: [04:14] Very good. It’s amazing, isn’t it the way a lot of people think financial advice is about numbers more around human relationships and how you can help people in the psychology wise?
Katherine Hunt: [04:25] Absolutely. Well, if you talk to any experience advisors, they’ll tell you that they see themselves top of the hierarchy of all the professionals who advise clients. They need to know the ins and outs of what the client feels and thinks about money, what’s happening in their family. They need to know if they don’t get on well with one of their brothers or sisters because that has implications for the estate planning and the client isn’t necessarily going to tell their lawyer that kind of information so it’s really up to the financial planner to make sure they get this information and then coordinate that relationship with the other professionals with the accountants and the lawyers. Without that, without trust, without having a solid relationship, you never going to get that kind of information you need to be the best financial planner. I think most professionals now really do recognize the need for psychology in those relationships.
Fraser Jack: [05:19] Yeah, exactly. Now you mentioned that you wiggled off to Europe to do PhD so Dr. Kathrine Hunt, now I guess we’re supposed to, should we call you?
Katherine Hunt: [05:29] Especially if I’m in trouble. That’s when the titles and the middle names come out.
Fraser Jack: [05:34] Fair enough. Then you coming back to Queensland and decided to start working at Griffith?
Katherine Hunt: [05:43] Yeah, exactly. I was living in the US at the time for the last six months of my PhD and a job came up as a lecturer in financial planning and I thought, okay, that’s a pretty good reason to move home so I came back and took up that role which has just been really fantastic the last five years, really shaping the courses in the masters of financial planning and of course, teaching them to my amazing students of course they’re so brilliant.
Fraser Jack: [06:10] I was going to ask if you were tempted to come back and to advice but I guess in a way you’re helping more people by helping more advisors.
Katherine Hunt: [06:18] Yes but I do miss that client contact. I really do. I visit a firm in Brisbane every few months just to get that experience of being physically in the client meeting, although I’m not the advisor delivering the advice, I’m literally an overqualified note taker in those meetings but I need to experience that benefit. The benefiting of actual clients. That’s what financial planners do and it’s such a fantastic thing.
Fraser Jack: [06:47] You’re teaching students and really I guess if we go back to their opinions, are they coming into your courses to be financial advisers? I’m told they are the ones that may be coming from high school or through that pathway.
Katherine Hunt: [07:02] I’m teaching a masters of financial planning so half of our students are career changers. Average age is probably 40, maybe 50 and so they’ve been in HR, journalism, all kinds of careers and they want to become financial planners and the other half are experienced advisors, most of them with 20 years experience and they’re just looking for that next level honing of their skills. That’s within the masters, within the Undergrad which thanks be to God I don’t teach right now, I’m much more of a strategic person than a here’s the technical information like in the Undergrad. The Undergrad students they are yeah, primarily high school leavers and the students that are more interested in or who are interested in money and people end up in financial planning as a major but we have a pretty big issue in the Undergrad because of course you can imagine these darling little 17 year olds who enroll in a bachelor of commerce and then they are probably still living at home, that’s what they do these days and where do they get to choose their specialization about whether they choose finance, economics, accounting or financial planning because they can only choose two, they talk to mom and dad and what do mom and dad say? “I saw in the royal commission, I’ve seen this, I don’t know about that. Do accounting.” of course.
Katherine Hunt: [08:26] The profession that will soon be overtaken by robots completely and economics as well because they see on the news that there’s often an economist there talking so they think that there’s jobs in that as well. We do have a little bit of a battle to help students understand that financial planning really is the way of the future.
Fraser Jack: [08:50] Yeah that translation of the financial conversation into real human speak I guess is the difference between the two.
Katherine Hunt: [08:58] Absolutely. Well quite often when I was program director, I’d have these weekly meetings with various students and they’d say, “I want to know how I should pick my major.” And I say, “How do you feel about Microsoft Excel?” If their eyes just light up, I say, “Great, fantastic you would be ideal for a finance and an economics major.” If they go, “Yeah, no, I can do it but I’m more interested in making an impact, helping people, seeing the results of my labors,” I think, “Okay, great. You’re definitely someone who would benefit from financial planning.”
Fraser Jack: [09:35] Yeah, very nice simple way of looking at it and helping people down their career path.
Katherine Hunt: [09:42] Yeah, absolutely.
Fraser Jack: [09:43] Now there’s obviously a lot going on in the education space for financial advisors now having to go an up-skill them and increase their qualifications. Are you seeing a lot of that coming through yet or are people still waiting?
Katherine Hunt: [09:56] We definitely having a lot of conversations, so I’m out and about at industry events all the time and I get swamped by people as soon as they hear through the grapevine, “There’s an academic over there.” They just surround me and, “I need to do this and I need to do that and what do you offer?” All this kind of bombardment of questions. In terms of enrollments, at the moment we’re still pretty steady and in terms of our long term average in the masters of financial planning but we have of course, so that’s where I’m actually engaged is in the masters but we have all those other offerings the Grad dip, Grad cert, something like that in financial planning as well, plus the new bachelor of financial advice, which is online. There’s lots of spaces where the students might be going into that I haven’t noticed yet but I hope they don’t leave it too late.
Fraser Jack: [10:52] How long do you think it would take to do the Masters and all that from start to finish?
Katherine Hunt: [10:59] A bachelor is, we can push it and do it in two years, which is three trimesters a year. The master’s is a year and a half on full time and the ... I really should know if it’s a Grad dip, or a Grad cert but it’s about half the masters.
Fraser Jack: [11:18] I also looked at the MBA, is it something that you look at it as well?
Katherine Hunt: [11:22] I don’t teach directly into the MBA because they teach primarily the hard finance stuff. I teach the financial planning. My colleagues in the offices next to me teaching for the finance courses within the MBA but there are a number of financial planners who do the MBA.
Fraser Jack: [11:45] As you mentioned part of your work is not just around teaching but some of the research stuff you’re doing, the stuff that gets you really excited. Do you want to give us a little bit overview of what you’re doing in that space?
Katherine Hunt: [11:55] Yeah, for sure. There’s so much exciting staff happening in research and financial planning because it’s such a new profession or can we say it’s newly recognized as a profession. There isn’t that body of literature. Whereas if you look at medicine, nursing, the legal profession, it’s just this huge body of literature in that space already and in financial planning there isn’t, which means there’s just so many opportunities. Of course the things that I’m interested in are client engagement, so mixing that psychology side and blending it with the actual financial planning process. On top of that as well is the client relationship between financial planners and the client so what is it that determines a strong relationship from the client’s perspective, from the advisor’s perspective.
Katherine Hunt: [12:45] Another really cool part of research that I’m working on at the moment is trying to reconsider risk profiling. That’s just a messy topic I’ve found over the last ... When you look back at all of the risk profiles that have been issued by licenses over the last 20 years, they seem remarkably similar, remarkably short and I’m not really sure about how effective they are but I certainly know that most financial advisors are not that impressed with the existing model. I’ve been rethinking that and reconsidering how we can build a system that can actually serve financial advisors.
Fraser Jack: [13:28] Just on that risk profiling, I’ve had this conversation with you a couple of years ago and certainly the word effective risk profiling comes to mind. It seemed to me like a lot of the risk profiling was created more of a compliance process than the actual engaging process, one that can help the consumer, one that can educate them along the way. Do you want to break down the different sort of areas of risk profiling that you’ve looked at over at the time?
Katherine Hunt: [13:56] Definitely. I see risk profiling really in terms of a few key components. One of them is literally quantitatively what is the client’s risk capacity. Built into that are two things. One, how much wealth do they have? That might be about half of their risk capacity. The second is how much earning income do they have. What’s their actual ... what’s their education? What’s their experience in a particular profession because that’s the best measure of how much income they will be able to generate. Those two components form the client’s risk capacity, which is literally, it’s a quantitative thing. You don’t even need to discuss that with a client. You can just figure that out and you can determine whether the risk capacity is high, medium, or low.
Katherine Hunt: [14:45] Another component is the client’s actual ... so the psychology side, their risk tolerance. Now a traditional risk profiling model has these arbitrary questions about financial markets and the client’s attitude towards various components of those financial markets and investments and the investing time horizon. It doesn’t really take into account the fact that there are a lot of nuances in every individual. I might come out as a high risk investor but if I have high optimism and low self-control, that means I’m probably a self sabotager and I’m probably going to sabotage my financial plan. As a client I wouldn’t go into a relationship with a financial planner thinking, “I’m going to get this fantastic SOI.” Then when they call me up a month later and ask how everything’s going, I’m going to tell them I’ve bought a sports car on their credit card. Clients aren’t unanticipating this but we need to be able to as financial planners. The client’s attitude towards risk needs to be layered with other components of who the client is.
Katherine Hunt: [16:03] Another one of those layers is financial literacy. This also plays quite heavily into the client engagement side as well, which is how are you communicating with your clients? How are they understanding the statement of advice and all of the communication you have with them? Because if they have low financial literacy, they need to be communicated in terms of ... in ways that they can understand. There’s no point having a monologue at them or sending them documents that they don’t understand. Likewise, high financial literacy people wouldn’t necessarily want the basic generalizations. They can well understand the details of what you’re doing, why you’re doing it.
Katherine Hunt: [16:44] There’s these components that play into a client’s attitude towards risk, what risks they’re able to actually take on and another component, of course, that’s really important from the psychology perspective is ... because of course these attitudes and I think Neil Kendall has a topic has the best example of this discrepancy between attitudes and actual behaviors in the financial planning space anyway. His analogy I might relate it but it sounds a little bit like, “Fraser, can you tell me on a scale of one to 10, how much do you like dolphins?”
Fraser Jack: [17:20] I really hadn’t thought about that. It’s a great question, let’s go with seven.
Katherine Hunt: [17:26] Seven. Yeah, I’d go with seven too. If you’re like me though, if I was then to ask you, how much money have you given to dolphin charities? Or how much time have you given volunteering towards dolphin conservation? I don’t know, [inaudible 00:17:43], rescue, various things you could do to help the dolphins. If you’re like me you’ll probably say, well that’s a zero and a zero and the fact is I may think that I love dolphins but my actions show my true intent in that regard, so we can ask clients all the time. “Oh fantastic. You think that you have a long term time horizon and you can wear the ups and downs of the markets and you’re okay with a strategy that locks away your liquid assets for a longer term.” but in reality where’s the client at?
Katherine Hunt: [18:18] We have this constant thing, you might’ve had it yourself Fraser actually, where when we go through this, the traditional risk profiling method and the client comes out as a defensive investor or at least conservative and then you go through their assets and they own six investment properties within one suburb within which they also live and you’re thinking, okay. The extreme lack of diversification in this portfolio would indicate that you are an extremely high risk tolerance investor.
Katherine Hunt: [18:51] Just if I was just quantitatively look at what you’ve basically done with your money but of course we have then the risk profiler that comes out and says the client is very cautious, doesn’t want to invest in market, doesn’t want their money to go up and down at all and so you have this really interesting place where a financial advisor needs to be able to engage with a client on that level and actually share with them, “Okay, so we do have this discrepancy. What does that mean and what are we as a professional going to do about that going forward?”
Fraser Jack: [19:22] That’s really looking at their past behaviors and saying, you say you want this one thing but your behaviors prove that when you’re not thinking about these things, you want something that you actually do something else, so you are the conscious and the subconscious or not conscious and unconscious minds making those decisions.
Katherine Hunt: [19:40] As financial advisors, what we really need to be able to do is to make sure that we’re investing people appropriately and that doesn’t necessarily mean investing them more conservatively. Sometimes that means finding out why they’ve responded like that to our survey on risk tolerance and making sure that we can actually educate them on things like diversification to move them up the scale as well so that we not actually harming their future retirement options.
Fraser Jack: [20:09] Yeah because a lot of the time, a lot of the guys will go through some education and explaining certain things before they’ll answer the questions and that’ll probably change the outcome of the questions too whether they ask do the education before or after the questionnaire.
Katherine Hunt: [20:28] I have spoken to a medium sized firm who told me that, there’s a remarkable correlation between the risk tolerance of their advisors and the risk tolerance of the clients of those advisors. High risk tolerance advisors tend to have high risk tolerance clients and conservative financial planners often have conservative clients and it’s not only a self-selection thing regarding I will take you as a client or I will take you. We are as financial planners unconsciously influencing the clients to be like we are. That discussion, that sitting down face to face with a client and going through an impartial survey [inaudible 00:21:09], it’s not as effective as actually having the client do it in their own time privately.
Fraser Jack: [21:18] Also as you meant before past behaviors. How much weight you put on past behavior this is what they’re telling you is the case on their questionnaire?
Katherine Hunt: [21:29] At this point I wouldn’t say that there’s a hard and fast way, it’s more about that’s the stimulus to have that discussion, to have a very deep discussion about diversification, for example, with the client to actually move them up to where they are more appropriate. In that example, they might actually be a balanced story growth investor after they’ve had some explanation of what they’re about, their past behavior actually means in terms of investments and the ramifications of that.
Fraser Jack: [22:00] That’s really been allowing the client to take ownership in that process to looking at their behaviors and then reflecting that back to them and then saying to them, well, now that we’ve looked at that, where are you and whether they are prepared to take ownership?
Katherine Hunt: [22:17] Absolutely and the ownership that the clients feel towards their financial plan is something that we as financial planners find very difficult because when a client walks in, in theory we’re the expert and so we want to tell them what they should be doing, but in reality, they managed to survive this long. They managed to work this long. They managed to save up enough money that is worthwhile for them to see a financial planner. They are actually just as expert on their current financial situation and what they can handle as we are. Clients don’t necessarily feel ... there’s going to be some exceptions to this, but clients don’t necessarily feel good about a professional relationship when the professionals says, “Right, this is what we’re doing and we’re doing it. I’m in charge here.” That recognizing the fact that these clients have actually got themselves to this point alone, I think that’s really helpful in reframing things in terms of that ownership side as you indicated.
Fraser Jack: [23:21] You’ve been working this for a couple of years, you were working on a bit of an online survey and form and trying to crack this nut if you like, how’s that going?
Katherine Hunt: [23:30] It’s going great. We’re collecting responses, so for all of your amazing listeners, if they want to have a look, it’s free. Clients can do it, they can do it and it’s at www.profilingrisk.com. It’s an exciting project.
Fraser Jack: [23:47] That’s something that you have been researching so for those people that want to check that out, they can have a look at that there and go direct to you and chat to you about it, obviously the information is protected and the lessons.
Katherine Hunt: [24:04] Oh yes, absolutely. We have extremely intense ethical protocols to follow in order to get any research project off the ground and all of this is very long disclaimer to start even which goes through that data about how ... basically nothing’s recorded that could possibly identify you or your clients.
Fraser Jack: [24:26] You are essentially also looking for more wealth, thousands of responses is really to create a body of research?
Katherine Hunt: [24:37] Exactly. The interesting thing about the existing risk profile systems is that they haven’t been validated by the academic community and by empirical methodology. There’s a reason why 70% of the cases I’m going to say cases before falls because of inappropriate risk profiling. Some of that, of course, is that there isn’t an option for the clients to say bad investment returns, so the next option is risk profiling but the existing with risk profiling methods are not something that [Foz 00:25:19] looks at it and thinks, “Well, you’ve done your job, you’ve done those 15 questions, so you’re good to go.”
Katherine Hunt: [25:26] The plan is here with this research project is to actually develop a model of risk profiling which is academic empirically tested, and is just basically something that financial planners can rely on and that the regulators can rely on as well. They can say, “Yes, this has actually been tested. We have thousands of responses. It’s been analyzed appropriately, published in peer review journals, and we good to go.” If people have used this then that is something that they can rely on. That of course, is the ultimate goal of the research projects. The more responses we get to the survey, the sooner we will be able to do that.
Fraser Jack: [26:06] Excellent. What are your thoughts around actually when you might be able to get to that ultimate goal?
Katherine Hunt: [26:15] I’m hoping this year.
Fraser Jack: [26:17] Fantastic.
Katherine Hunt: [26:18] We’re a great start. Yes, I think it should be this year. Absolutely.
Fraser Jack: [26:26] Fantastic. You’re also dealing with the work of Financial advisors in the client engagement space in sort of moving and as you mentioned, follow up, flowing on from the risk profiling, but the really around the climbing engagement, the questions and so that really is that psychology stuff that you have under your belt?
Katherine Hunt: [26:48] Yes. That’s a really exciting space that I’m moving into at the moment and on the more practical side be ready for [inaudible 00:26:56] to date. I’ve actually been approached by Clearview to present at their road shows, which is coming up in February on this very topic about systemizing that client engagement I’ve contributed as well for one of their reports. It’s a really exciting thing to be engaged with because the client relationship is the foundation of the financial planning process. Nothing within that process is going to happen without full disclosure from the client and without the client wanting to stick around for a few years so you can actually see the good results that you’ve done. Most of our efforts is spent on the technical side and that’s fantastic. I really think that that core technical knowledge is critical. A critical foundation, but in order to make sure that we have these long term and rewarding client relationships, we need to start to systemize the client relationship.
Katherine Hunt: [27:51] Part of what I’ve started to build in terms of that client engagement process is looking at helping financial planners to develop a system where they have a set of questions, powerful trust building questions that they could potentially ask to new clients or existing clients to get the client talking about their relationship with money, about how they feel about certain components of their own life and their own goals, why things are important to them. Starting to really meet the client where they’re at on the next level and start to actually understand which questions work best with which clients. Part of the other engagement process with the clients is actually on communication to the clients. Whether that is the statement of advice or whether it’s the monthly newsletters. We need to understand other clients are visual learners, 70% of people are and that’s great. I’m definitely a visual learner. I can’t even listen to podcasts without a pen and paper, so I’m definitely visual. I need to create a visual around what I’m hearing and then what I actually learned from is the visual that I’ve just drawn on it and most people are quite similar yet we’re providing them with these textual communications.
Katherine Hunt: [29:16] On the other hand of course, 20 to 30% of people are auditory learners, so they get these pretty pictures that I develop and they go, “What is that mess on that page? I don’t understand. Could you please read it to me?” Then they hear the words and they understand that. Something so simple as understanding and categorizing and then acting on how you’re communicating to clients based on their learning style, whether they’re visual or auditory. Is just one of those things that actually helps you have ongoing fruitful communications with those clients.
Fraser Jack: [29:52] Those internal representation systems questions, are they the first ones you ask?
Katherine Hunt: [29:59] Yes. If you’re in an initial meeting, absolutely. Until you’ve had a good little chat about what makes the client tick, why they want to achieve the goals why they want to achieve.
Fraser Jack: [30:09] Excellent, just on the goal conversation, what’s the conversation around goals and goal setting then those sorts of things that you have in you in your [inaudible 00:30:18]?
Katherine Hunt: [30:21] Some of the questions that I would ask, one really powerful question is to determine whether the client is ... I’m going to say positive or negative, but maybe it’s a game versus a don’t lose attitude. Something as simple as telling about the future.
Fraser Jack: [30:38] Was that a motivation whether is towards or away to motivation type question?
Katherine Hunt: [30:50] Absolutely. Yeap. Something as simple as tell me about the future and the point of that question is probably to pick up on, are they talking about how they want to avoid being homeless and they want to avoid family issues? Or are they talking about the actual wealth lifestyle that they want to achieve? Using that to categorize them in that sense. There’s quite a few very powerful questions that we can ask with the startup client relationships and when I meet with financial planners to film them, to include them in my courses, I often ask them, “Can you tell me three powerful questions that you ask to clients because most financial planners have the [inaudible 00:31:22]? What I challenge financial planners to do is to develop 36 unique, powerful questions and to hone it from there.
Fraser Jack: [31:35] You mentioned a systemization of the questions. How do you bring that into it?
Katherine Hunt: [31:41] Usually when we meet with a new client, we know something about them. We probably know their gender. We might know that they’re coming in as a couple or are they coming individually. We might know that there are retiring. They might’ve mentioned this when they were making the appointment with you or with the admin team. This information is what would then spiral on the next step of the systematization, which is which of those 36 or which of those, if we whittled it down to 15, which of those powerful 15 questions may be most appropriate for the fact that this client is a retiree or is a couple of whatever that looks like.
Fraser Jack: [32:21] You’d have those questions been asked and then they say 15 or whether the relevant powerful questions sent to their client or asked to that client?
Katherine Hunt: [32:31] Yeah, they are asked in the initial client meeting. I wouldn’t say 15 within that meeting though, I’d say maybe write down five to 10 of those very powerful questions that you think might be appropriate for this client and see how many you actually get through.
Fraser Jack: [32:48] Just on the idea of meetings, do you teach or subscribe to a theory that around the idea of the best or the ultimate amount of client meetings or the process or how long you should spend with a client be prior to giving them the advice?
Katherine Hunt: [33:03] I think and I train my students as well to try and aim for a minimum of two meetings, two solid length meetings with the client for any of us is given. The first one is generally that relationship building and collecting a little bit of data. In the meantime you can get them to send you any other stuff if they have it available. The second meeting is I think ideally talking about, “Okay and what did you not tell me? Before I go ahead and do this to advice. Have you just remembered that you have that other property?” Because that happens all the time in the SOA presentation meeting where the client says, “Well that’s all well and good, but I didn’t tell you we also have [inaudible 00:33:46], or actually we’ve sold that or you know, things change. Part of it is that missing information and part of it in that second meeting should be a discussion of preliminary ideas regarding the strategy.
Katherine Hunt: [33:59] An open discussion around ... so what I’m thinking as the professional in this relationship is I’m thinking that we need to probably consolidate these super funds at the moment. I’m thinking an SMSF is not appropriate for you because you’re not interested in managing your own super. What do you think about that? Just having an open discussion around [inaudible 00:34:21], thinking of doing, but how does that resonate with you? and actually saying and of course after that meeting, the planned strategies that had been thought of so far will probably change a little bit and be defined according to the client’s responses plus the inevitable missing information that suddenly arises.
Fraser Jack: [34:40] I love that question. What a great powerful question. What have you not told me? I’ll start using that on the podcast?
Katherine Hunt: [34:49] That is a great one.
Fraser Jack: [34:51] When it comes to the goal setting around a client’s goal. How do you go with breaking down those questions and then setting the goals and keeping them focused on the goals?
Katherine Hunt: [35:02] That is very challenging because when you ask someone their goals, they’re most likely going to say 10 non achievable goals and two achievable goals. I think there’s a lot of education and discussion that needs to happen around goals that’s not just writing down the goals that they’ve said, but actually discussing those. In terms of goals, my most important thing that I try and communicate to my students and financial planners who I talk with is to actually figure out why is that important to you. A goal of I want to send my children to private school. Why is that important to you? Because in Australia, we have one of the best public education schools in the world. We have a very high average level of wealth, which means that there’s not a lot of crime, there is not a lot of violence that’s happening at public schools unlike maybe in the Bronx so in America.
Katherine Hunt: [36:04] What is it about this that’s important to you because it’s obviously something that it’s important to you. Let’s figure that out because I need to know why it’s important. If the client through those questioning processes comes up with, “I don’t know. Our neighbors, they send their kids to a private school and that seems good.” “Okay, cool.” That’s not a good enough answer so we’re going to have to talk through this a little bit more. As a financial planner, we’re not necessarily going to work towards goals that you don’t even understand yourself. Really pushing the client to find out what really are their goals and why it’s important to them.
Fraser Jack: [36:40] To me this the real area where professionalism is coming into the industry and that is in that very beginning and really diagnosing the conditions and the problems, a bit like a GP or a doctor would do in that scenario where they actually don’t move to the next part of the process even though maybe the time’s up just because they haven’t got to diagnosing a problem until I’ve actually really got to understand the underlying behaviors, I guess.
Katherine Hunt: [37:08] How it came about and of course, discussing with the client as a doctor does. They don’t just say, okay, this is the outcome for you. We’re going to cut you open on the surgery table. They don’t say that. They say, okay, so I would recommend this. You do have other options such as this. What do you think? I get that client to make that ultimate decision about what they do.
Fraser Jack: [37:29] I like using the doctor analogy a lot because it generally puts the prescription of medication at the end of the process or prescription of product at the end of the process and always at the end, never at the beginning. A lot working on in the behavior space and the risk profiling space and now working with some directly with some advisors through their PD days and bits and pieces and that client engagement space, you could cut a lot going on.
Katherine Hunt: [37:56 ] It’s an exciting world. I must say that being an academic, it does have its upsides. Being able to actually pursue these projects that I find is so important for the real world and there as many of them as I like it’s [inaudible 00:38:12].
Fraser Jack: [38:13] Are you also publishing papers then on that client engagement piece as well?
Katherine Hunt: [38:18] Yes, absolutely. Continually. As you might know, the publication process in academia is quite a long one even after they accept the publication which first off takes a couple of months. They often accept revisions that you need to do and then you do that which takes a couple of months and then even after the final acceptance, they often don’t actually publish it for a year or so. Everything is just coming out in the pipeline and you’ll see a lot of output for me in the coming months.
Fraser Jack: [38:51] Fantastic. I would say the education trends are rising within the financial advice in Australia and that’s a good thing.
Katherine Hunt: [38:59] Fantastic. I think it’s just so inspiring as well that we actually have some leadership in this space to help the profession in that upward journey I suppose. Nothing being the guinea pig I suppose, is it a guinea pig? Not really, it’s not really a test but being the first to go through with a new system, it can be really difficult for the people who are in that first cohort, which is us and on all the financial planners in Australia right now. It’ll just pave the way for the next generations of financial planners and also for the communities reputation about what a financial planner is, what it means to be a financial planner and the actual value that we bring as well.
Katherine Hunt: [39:44] That’s something that I think a lot of financial planners that they struggling with where the client sits down and says, “Okay, so you’ve been managing our things. What am I investment returns?” Rather than saying, “Well, actually the most important thing that we’ve done is to incorporate all of this knowledge into a strategic plan which actually suits you and your family and your goals.” Rather than being able to say that we’re often put into a corner of saying, “Well the investment returns for these because of this markets and that markets.” Once we have that standard of education across the profession, I think it will be so much easier for us to make sure that we can communicate more of that value about the goals that we’ve achieved for the clients, but also about who we are as professionals and the fact that we’ve invested a huge amount of time, money and effort into becoming this amazing professional that we are and so we are a valuable service provider. I think that’s what the outlet looks like to me.
Fraser Jack: [40:47] There is a lot going on within business environment. People are selling their businesses or people are trying to ... moving out. There’s a lot of people are wandering or in a state of not knowing what they’re going to do. How do you think that ... what the next few years are going to pan out really with regards to businesses and business valuations and people moving in and out of the profession?
Katherine Hunt: [41:16] It’s hard to really predict the future in that space because it’s so logical. If you’ve got five years before retirement and then you find out that you’ve got three years of education ahead of you. I can totally understand that those advisors say, “Well, no. That just doesn’t make any sense.” and they might leave. On the other hand, what this education requirement means is that more students are going to realize that this is a top level profession and the goal could be entering the professional, in the profession, doing that professionally and going into off rise reps. I’m not sure if it’s going to balance out completely the number of advisors who are leaving and the new ones that are coming through, but I think it’s only going to do good things for the profession even in the short term, even within five years, I think we’ll find a pretty nice balance. Obviously when I talk about those personality components of the risk profile, I think you might be able to tell that I score extreme optimism on those questions. I’m very optimistic about the profession.
Fraser Jack: [42:25] Yes. Very optimistic. I hope you’re not so low on self-control which I don’t think so having a PhD. Just to touch something on the psychology side too. There’s a lot of advisors as you mentioned [inaudible 00:42:37] might be in their sixties or something. They go, “Okay, great, well it’s an opportunity for me to go because I’m not going to do this study.” There’s probably a lot of advisors and that just younger than that slightly that maybe, that end up going. Then sort of from a psychology point of view, feel like I’ve just been thrown out of the ... maybe they tried or they have been a profession of being entertained 20 years and ... how do you think that’s going to go with regard to maybe people that have once been seen or thought of as the top of their game and now being sort of cast aside by the industry?
Katherine Hunt: [43:15] Cast aside meaning pushed into education they don’t necessarily want to go.
Fraser Jack: [43:22] Correct or not doing it maybe.
Katherine Hunt: [43:24] I think they’ll find other ways to serve the community. If they are not interested in the formal education space in financial planning, not interested or just ... maybe it’s a financial thing. It could be many reasons but there’s a lot of ways that they could potentially serve the community using some of their financial skills. They could end up as coaches and maybe, I don’t know how other kinds of roles, I suppose that use the strategic knowledge of building client relationships as well to actually benefit clients. I hope that’s one of the outcomes but this is then a post my extreme optimism. I’m a nerd and I love studying. I assumed that everyone else is also a nerd and also loves study.
Katherine Hunt: [44:13] This is an example of the 20 years experience, forced to do a degree that they don’t really want to do and are at the top of their game and don’t necessarily [inaudible 00:44:22] need to do in terms of performing their duty. I see them as thinking, “Well, what a great opportunity to go and make sure there’s nothing I’m missing in my education.” That’s what I project on to those advisors.
Fraser Jack: [44:37] Good answer. You mentioned the word coaching. Do you see that as being a new offshoot of this? A lot of people just getting into coaching and sort of maybe not providing the financial advice piece?
Katherine Hunt: [44:47] Yes, Absolutely. I’m actually involved with a business that’s financial friend which does exactly that. Literally works with people who ... the target is women who are heavily in debt and helping them to get out of debt and the process is Skype conversations where we work through each week a series of questions and challenges as well for the client to actually help them understand. Okay. What is it about buying, say stereo-typically speaking, buying shoes that makes you feel good? How can we get you ... What else makes you feel good? How can we get you to the point where you’re still feeling happy about your life but you’re not spending it on shoes? What does that look like for you? Asking powerful questions rather than providing answers. I think especially ... Think about the technology that we have at our disposal right now we’re meeting through amazing software that was just unthinkable 10 years ago. I think that there is a lot of opportunities for people who have financial planning skills to actually utilize those to benefit individuals, just not through providing individual financial advice.
Fraser Jack: [45:55] Excellent. Thank you. We will finish on the [inaudible 00:46:00]. Tell me if you speaking to members of the community, a friend of yours, humans that haven’t received advice yet and they’re maybe thinking about it or you or telling them they should be receiving financial advice what do you say to those people? [inaudible 00:46:15] seek advice?
Katherine Hunt: [46:17] I usually recommend that people do seek advice. I use my own personal experience as an advisor and someone who now works with advisors in growing their businesses. I mentioned to people that there is a huge chance that the fees that you pay in the first couple of years, will be effectively paid for by either tax or other structural things that your financial advisor will be able to give you. I also talk to people about how seeking a specialist is something that’s normal in our community. We have no problem with seeking specialists in the fields of dentistry, medicine in the law and our personal financial situation is so important that I think it’s worth having a chat with financial advisors, have a chat with a specialist to actually figure out what they can do for you, how they could help.
Katherine Hunt: [47:12] I also do recommend that people ... they usually don’t take me up on this because I’ll often just provide a specific recommendation about an advisor I know personally but I do recommend anyway explicitly that they also have a chat with a couple of financial advisors if possible so not necessarily go through the full client data form with a couple of financial advisors but meet with them and have a chat about their business and their values and what they can do for them in a general sense.
Fraser Jack: [47:40] Very good. If you’re giving tips to a younger advisor or somebody who’s a student coming through, what tips do you give to those people?
Katherine Hunt: [47:52] I tell them to share their knowledge. That’s the number one thing. I encourage my students who are ... no matter what it is that they’re really looking for, but they’re all looking for success. I tell them to share their knowledge as much as they can. Make podcasts for example, like you’re doing right now Fraser. You’re such a leader in that space. I tell students, if you know about something like superannuation contribution caps, why don’t you make a little video on it? Why don’t you share it with your friends? Why don’t you share that knowledge that you have and start to build a track record of being a leader in sharing knowledge, whatever that looks like.
Fraser Jack: [48:27] Thank you. If you’re speaking to maybe somebody else that’s in the peripheral or the industry accountants and those sorts of things, looking at getting into advice or what tips do you give them?
Katherine Hunt: [48:39] I encourage them to leverage the transferable skills that they’ve got from their existing professions. Many financial advisors have had previous professions and they might be thinking, “Well, how can I do this? How can I do this financial planning thing?” I have a student right now who thinks that and [inaudible 00:49:02], we talked about it. He has a history in journalism and I said, “You’re really good at asking questions and then shutting your mouth and listening to the answers.” That is a primary skill that will mean you will definitely have success in financial planning. Just identifying where they actually do have the skills probably already and all they need now is the technical stuff which once you learn it stays with you. It’s easy to stay up to date.
Fraser Jack: [49:36] Thank you ma’am. Last question it’s about you. Tell me if you can have your time over you can go back and time and knowing what you know now and give yourself a piece of advice, what would you say to yourself?,
Katherine Hunt: [49:48] Piece of advice for me.
Fraser Jack: [49:51] Go back anytime.
Katherine Hunt: [49:54] I think I would’ve said, well learn to surf earlier instead of age 12 which is a bit late and surf more.
Fraser Jack: [50:05] Surf more but I thought you already serve a lot?
Katherine Hunt: [50:05] It’s not every day. I don’t ... I do now, surf every day but when I was a teenager, I probably only surfed every couple of days.
Fraser Jack: [50:11] Was that through your fear of drowning?
Katherine Hunt: [50:14] Part of it was. I have been really good in that space though. I very rarely have those drowning panic attacks in the ocean that I used to. Maybe Layne Beachley was right only the fit of fearless.
Fraser Jack: [50:27] There you go. What a good way to end it. Thank you so much for coming on the show today. I really appreciate your time and thank you for sharing [inaudible 00:50:34] which thank you.
Katherine Hunt: [50:35] Thank you for having me Fraser.
Fraser Jack: [50:36] All right. See you. If you haven’t already, I’d love you to subscribe to the podcast on your podcast platform of choice and to continue the conversation hit over to our social media channels. We’ll catch you next time.
Disclaimer: This document is a transcription obtained through a third party. There is no claim to accuracy on the content provided in this document, and divergence from the audio file are to be expected. As a transcription, this is not a legal document in itself, and should not be considered binding to advice intelligence, but merely a convenience for reference.