We recently decided to replace our kitchen; we had a choice firstly to do it ourselves or outsource to an expert. In our case going down the DIY route was not an option, I once tried to make a shelf but the saw seemed to have an angle to it!!!!!! We took advice from a friend who introduced us to a kitchen fitter. We set out our plans, he provided us with a fee for the work. We then explained that we would be away for two weeks and was it realistic for him to have the kitchen fitted and finished in that time. The kitchen is not big and he was confident that he could have it all finished by the time we came back.
Six weeks later and the kitchen is in, but the tilling, decorating and finishing touches seem to be some way off. Every time we speak to the fitter he sets deadlines and seems to miss them. We have had people helping for free to get things done but still we can’t see an end to this. To be fair three things have gone against him, at the start he lost a week because a relative was in hospital, then the whole kitchen had to be re-wired and finally it is a positive negative he is a perfectionist. The last is important because as deadlines slip the perfectionist bit becomes frustrating and somewhat annoying!
So what does all of this tell us, does it tell us that actually we are better to do it ourselves or is it something else. It made me think about financial planning and advisers, and more importantly why communication is such an important part of the service proposition.
Let me explain, the fitter we choose is not the cheapest and is certainly not the most expensive. We choose him because he is a perfectionist, I won’t go into the detail of the small things he does that actually you and I wouldn’t care about but these small things will eventually deliver an amazing looking kitchen. His downfall was two things firstly he told us what we wanted to hear, that is that he could deliver what we wanted in two weeks and secondly as deadlines slipped he continued (and continues) to fail to communicate when he might finish the work.
We have set a fee so actually cost wise it is not costing us anything but stress. But flip this around, if he looked at the kitchen and ignored what we wanted i.e. a two week delivery date and said actually it will take two weeks to fit the kitchen and two weeks to decorate we would not be disappointed. If when he lost a week when we were on holiday he called us on day one to say he might lose a week we would not be disappointed (perhaps a little frustrated). And now as the days slip by if he communicated a strategy to finish the project we wouldn’t be disappointed if he kept to that strategy.
And this is very similar to financial planners, often we have unrealistic expectations. So say, I want to double my money in two years and I set that expectation to my financial planner. He listens to what I say, and says yes I can do that then one of two things will happen – firstly he will deliver on that expectation and I will be delighted or secondly (and the more likely) he won’t deliver on that and I will be disappointed. With the later he may do lots of planning and frilly bits but missing on my expectations will taint my view of him.
Financial planning like any project is about two way communication – if you have a goal with your money then you need to decide whether you can achieve that without advice, or whether you need an expert to help you. If you choose an expert then you should expect the financial planner to take time to understand about what your goals are, and then draw up a plan to achieve those goals, explain how they will look to achieve them and then talk about timescales. So for example it may be possible to double your money but that might take five to ten years, the key is understanding why you need the money in the future, what risk are you prepared to take and then understand that the journey will not be smooth and with that in mind having constant communication with the adviser. There will be times when the investment looks a mess, there will be times when it accelerates forward, there will be times when it seems to stall and there will be times when it falls back but if you take two points in time you should see your goals materialise.
So focusing on a fee of 1% is not just about the performance (although this is important) but about the goals and the way your financial planner communicates with you during the journey. Hearing what you want to hear is not always a good sign, but patience and good communication will ensure that you are not disappointed.