See no evil? Why it is important to help clients visualise the Big Picture

By Nicola Vernon

For financial planners, helping clients to fully understand the impact of their financial decision can be a challenge – especially when there is so much uncertainty around.

Talking about financial implications in 10-20 years’ time based on concepts like compounding and inflation can seem both intimidating and hypothetical and, often, clients don’t have a clear understanding of their financial position at the end of a tough conversation. This is especially true when it comes to answering questions like:

“Why can’t I have a bigger drawdown?”
“Why should I invest in growth assets? I’d rather just stay in cash.”
“There is so much uncertainty around. I think I should disinvest.”

Addressing these questions clearly in a way that is genuinely understood by the client is crucial to the long-term success of a financial plan - and making the discussion visual is a powerful tool to achieving this.

Making conversations meaningful through visuals

The Big Picture app is a brilliant tool assisting financial advisors to help their clients visualise their potential future investment outcome. Dating back to 1926, with many years of factual data, the tool can demonstrate various outcomes based on clients personalised portfolio choices. Using the app, planners can show clients personal scenarios based on safe withdrawal rates, safe saving rates, asset allocation, among others.

The app is available free of charge for financial planners on the secure section of the Nedgroup Investments website. Watch a training video here.

Q: How will this tool benefit my financial discussion with my client?
It is often difficult for a client to visualise their investment future. Based on years of back-tested data, one can show a client how their investment would have performed, given their investment profile. This is presented in real time, so you can show clients different outcomes while sitting with them – and in an easy-to-understand, visual way, clients are more likely to understand difficult financial concepts and how they affect their individual outcome.

 

Using the app, planners can also help navigate clients through the emotions of current volatility and uncertainty by helping them to see how they fit in to the bigger picture of long-term investing. Clients are sometimes all to consumed by the current political and economic landscape, inclining them to switch funds at inappropriate times, and do not focus on the future.

Q: One very topical discussion is fees. Would the app address this topic?
Yes. Years and years of fee compounding can have a significant impact on portfolio returns. The Big Picture app demonstrates how different fees can affect various investment outcomes.

 

Q: Would this tool be able to replace my existing financial planning tool?
No. The Big Picture app is not a sophisticated financial planning tool, but rather a visual aid to help clients easily and quickly understand the effect of their financial decisions and what their financial choices may look like in years to come. It’s a tool to facilitate open, meaningful discussions that leave clients empowered and planners comfortable that they have effectively communicated with and educated their clients.

Q: Where do I access the Big Picture app?
Financial planners are able to access the tool via the Nedgroup Investments secure site. If you would like more information about the app and how it can help you and your clients, talk to your Nedgroup Investments relationship manager.