Financial planning is defined as the process of developing strategies to assist clients in managing their financial affairs, in order to meet their lifestyle and financial goals (FPI 2019). Botha et al. (2023:2) add that financial planning is not a static event, but a dynamic, long-term process. According to Asbedo and Seay (2015:50), financial planning has evolved from merely assisting clients to function financially, to empowering them to align their financial situation with their lifestyle aspirations. Financial planning is a profession influenced by the legislation and regulators that govern the financial services industry. The financial planning profession is also regulated by the national (FPI) and international (FPSB) practice standards that all financial planners are required to adhere to (Brown 2008:4). Various role players are present and interact within the financial planning environment, thus playing an important part in how financial planning is applied, particularly in the South African context.

An individual in a professional occupation, such as a financial planner, needs to possess superior skills, based on a systematic body of theory, which gives them a sense of authority (Greenwood 1957). The professional service provider determines what is best for the client, as opposed to a non-professional occupation where customers determine the products and services they want (Goetz, Tombs & Hampton 2005:232). As a result of this authority over clients, and to protect the clients’ interests, most professions have a code of ethics and practice standards that need to be adhered to (Greenwood 1957). The financial planning industry has a code of ethics in the form of global practice standards that all financial planning professionals need to adhere to (Grable & Ruiz-Menjivar 2015). In South Africa, professionals in the financial planning environment must adhere to the practice standards as outlined by the international standards-setting board (FPSB) as well as the national professional body (FPI). Apart from training and other compliance standards, the FPSB is also responsible for developing the six-step financial planning process that all financial planners are expected to apply when providing advice. To be considered a professional financial planner, the FPI outlines specific competencies that must be met (Botha et al. 2023:12) and accreditation is required. Services offered must be based on ethics and the practice standards embodied in the six-step financial planning process.

The FPSB developed the six-step financial planning process, which represents best practices regarding the financial planning methodology (FPSB 2019). The first step in the FPSB financial planning process is to establish and define the professional relationship with the client by informing them about financial planning and making various legislative disclosures according to the FAIS Act. The second step is to collect the client’s financial information. It is necessary to gather relevant information to understand the client’s circumstances (FPSB 2019). This involves collecting quantitative information such as their age, lifestyle factors and current financial statements relating to their income, expenses, assets and liabilities (Knutsen & Cameron 2012:35) and qualitative information such as the client’s values, attitudes towards money and their propensity to save (Botha et al. 2023:127).

The third step of the financial planning process is to analyse the information to determine the client’s current financial situation (Knutsen & Cameron 2012:38). It is important to analyse the data in the context of the primary components of financial planning, which include personal financial management, investment management, risk management, tax planning, retirement planning, estate planning and business financial planning (Botha et al. 2023:129). Based on the analysis of the information gathered from the client, the financial planner needs to identify and evaluate possible financial planning strategies in the fourth step of the financial planning process. After deciding which of these strategies would best meet the client’s financial needs and goals, the financial planner develops financial planning recommendations in the form of a financial plan (Botha et al. 2023:140). The fifth step of the financial planning process is to implement the client’s financial planning recommendations. Thereafter, appropriate products and services are identified and the financial plan is implemented (Botha et al. 2023:142). The sixth and final step in the financial planning process is to review the client’s financial situation to ensure that the implemented financial plan leads to the achievement of the client’s goals.

As part of building a relationship (step one) with a client, the financial planner must inform the client about financial planning and make various disclosures as per the FAIS Act. Knutsen and Cameron (2012:35) add that the parameters and scope of engagement should also be established at this stage. According to Botha et al. (2023:3), building a relationship with the client is important because of the intangible nature of financial products and services. As the benefits of financial planning will be realised and visible only in the future, the client relies on a relationship of trust with their financial planner. According to Gill et al. (2005:289), a relationship of trust is more likely to occur if the client believes that the financial planner has the necessary knowledge, skills and competencies, benevolence and integrity. Collins and O’Rourke (2012:44) add that a trust relationship is important, as clients are then more likely to reveal their goals to their financial planner. Financial planners also have to trust their client’s vision of success, in order to help facilitate measurable objectives in trying to achieve their client’s goals.

While some clients may seek one-time advice or services, financial planners tend to engage in ongoing professional relationships with their clients. Collins, Baker and Gorey (2007:15) posit that financial planners who have the facilitation skills of financial coaches – that are complementary to their technical skills – are likely to establish successful long-term relationships with their clients. Collins et al. (2007:20) further add that establishing a successful relationship with a client involves setting the foundation through ethical and professional standards, effective communication through active listening, co-creating a relationship of trust, and facilitating learning through creating financial awareness and managing progress and client accountability.

Furthermore, when considering the first step of the financial planning process in a South African context, it is important to consider the fact that individuals from different cultural backgrounds establish relationships in different ways (Hofstede 2011). According to the ‘similarity attraction model’, clients relate better to financial planners who present similar characteristics to themselves, such as age, race, culture or gender (Sommer, Lim & MacDonald 2018). Criado et al. (2015:131) explain that this is because of stereotypes about different ethnic groups, discrimination and the prevalence of social norms. According to Hutchison and Sibanda (2017:384), human relations and networks play an important role in repeated or ongoing transactions, particularly among the African community. Furthermore, it is important to notice that contracts in South African customary law usually affect the entire family or broader community and require or expect the head of the family (usually a male) to consult with the older male members of the family before concluding a contract (Hutchison & Sibanda 2017:381). Financial planners need to be aware of cultural nuances while approaching or addressing clients who are from different cultural backgrounds because a lack of awareness may hinder their ability to establish professional relationships with clients.

The CFP^® professionals were asked demographic questions relating to their gender, ethnicity, cultural or religious affiliation, experience and qualifications. The responses of the 16 participants in this sample are tabulated in Table 2. Participant 13 withdrew from the study, so the applicable information has been removed from the table.

As can be seen from Table 2, the majority of the participants in this sample are male (11). Approximately half are of black African ethnicity (7) and their cultural and tribal affiliations are varied. It is important to observe that Participants 3 and 5 are naturalised South African citizens, as defined by the BBBEE Act. Participants have varied numbers of years of experience in the financial advisory field, with a minimum of 3.5 years (Participant 6) and a maximum of 32 years (Participants 7 and 9). It is interesting to note that in addition to the minimum CFP^® designation, two participants possess PhD qualifications (Participants 5 and 17) and two possess the Associate Coaching Course (ACC) qualification (Participants 9 and 10).

Participants were asked questions relating to their financial planning perceptions, experiences and opinions. From these questions, broad a priori (theoretical) themes were extracted and classified according to the six-step financial planning process as part of a broader study. This provided the coding framework to conduct the data analysis, whereby in vivo codes were assigned to the data and further used to refine the theoretical (a priori) themes as well as empirical (in vivo) themes. This study reports on the findings relating to step one of the six-step financial planning process only.

As can be seen from Table 3, the main themes that emerged from analysing the first step of the financial planning process from the perspective of CFP^® professionals relate to the participants’ sources of clients, establishing relationships, building trust and similarity attraction.

It is important to consider the source of participants’ clients as it may have an influence on how professional relationships are established. The sources of clients are based on whether contact is initiated by the client or by the financial planner. Several participants noticed that they obtain most of their clients from client-initiated methods, such as social media, their website or referrals. In other words, clients initiate the engagement with the financial planner using these forums – this means that they are more likely to be receptive to engaging in the financial planning process and committed to implementing the financial planning recommendations. Financial planner-initiated methods of sourcing clients include using an external or third party, client books, networking events or bank customers. When financial planners initiate engagement with prospective clients, they would most likely need to use selling techniques to convince the clients to have further engagements regarding their financial planning. It can be argued that clients who have been identified using financial planner-initiated methods are less likely to be receptive and willing to have further engagements regarding their financial planning. These findings are corroborated by excerpts from the interviews in the form of quotations, as shown in Table 4.

While considering how CFP^® professionals establish relationships with their clients, the findings reveal that some of the participants use several brief interactions to get to know and understand their clients better, with the aim of establishing a professional relationship with them. This interaction(s) is usually in the form of brief meeting(s) where the financial planner provides the client with an opportunity to get to know them and to determine whether there is an appropriate fit between them. Clients are also asked different questions to solicit information from them that will determine whether CFP^® professional is able to assist them. It is interesting to notice that these participants revealed that they are fee-based CFP^® professionals who neither derive any income from commission on the products sold nor from the amount of time spent with the client. Thus, the income of CFP^® professionals does not depend on the number of interactions with clients. In addition, it is clear that information gathering (i.e. the second step of the financial planning process) is not only exclusive to that step but also seems to be part of establishing a professional relationship (the first step of the financial planning process). The quotations from the interviews serve to corroborate this finding:

Participant 4 adopts a similar approach of having several brief meetings where non-monetary discussions are held, which are not focused on gathering information about the clients’ assets and liabilities, or completing compliance information. The findings indicate that to facilitate relationship building, collecting non-monetary information regarding the client’s expectations, their family structure and prior experience with financial planning and a financial planner assists financial planners in establishing a professional relationship with the client. Examples of non-monetary discussions are illustrated by the following quotes from the interviews with CFP^® professionals:

Furthermore, the first few interactions are also used to determine client and financial planner compatibility, which is easier if the CFP^® professional is able to relate to the client. Therefore, when establishing a relationship with a client, it is also relevant to find points of relatability with the client. It was also found that CFP^® professionals who share information about themselves and their personal experiences with finances reflect relatability with a client and this also assists in overcoming any cultural biases that may be present. These findings are supported by the following quotations from the interviews with CFP^® professionals:

The findings reveal that several client characteristics influence the establishment of a professional relationship, such as the client’s image of a financial planner, cultural patriarchal roles and the client’s religious beliefs. The findings reveal that the appearance of the CFP^® professional, as well as their approach, plays an important role in building a professional relationship with a client. It was also found that there is a certain status that is associated with having a white financial planner, because the image of a good financial planner is associated with white individuals. This is a perception that is often held by black clients. It was also found that if a CFP^® professional looks as if they have money themselves, this will influence whether a client will be willing to establish a relationship with them. It is thus clear that a financial planner should determine the client’s image of a financial planner during initial interactions with the client, because this image could influence the financial planner’s ability to establish a professional, trusting relationships with the client. These findings are consistent with the literature, as Zeka et al. (2016:79) found that a negative image of a financial planner is a hindrance in establishing a relationship with a client, as they are less likely to make use of the services of that particular financial planner. However, clients who have more positive images of financial planners if these CFP^® professionals are wealthy themselves pose a challenge for graduates who are qualified and certified to provide financial advice, but have not yet had the opportunity to accumulate wealth themselves. Furthermore, this is also a challenge for black CFP^® professionals who may be perceived to have low levels of wealth because of coming from households that were historically disadvantaged as a result of apartheid. The following verbatim quotes show the interviewees’ perceptions:

The approach of a financial planner is especially important when interacting with individuals from different cultural backgrounds, especially in cultures where patriarchal roles are very dominant. It is also important to consider how the level of patriarchy within different cultures influences how males expect females to dress in order to show modesty and respect. Thus, pride, modesty and respect play an important role in the African community, as well as the perceived role of women, including their approach and appearance. It is thus important for financial planners to determine their client’s cultural or tribal affiliation during the first few interactions with the client. These findings correspond with literature which states that different cultures establish relationships in different ways because of stereotypes about different ethnic groups, discrimination and the prevalence of social norms (Criado et al. 2015:131; Hofstede 2011). In addition, in highly patriarchal cultural groups, women may not be used to receiving financial advice from another woman if, in her culture, a male is considered the head of the household and responsible for making all financial decisions. Similarly, men may not be receptive to taking advice from a female. This finding is consistent with literature, which states that black African men have very dominant patriarchal roles in society (Kehler 2001:44; Ngubane 2010:21). In addition, this notion is consistent with Hofstede’s (2011:12) feminine versus masculine cultural dimension, which is distinctive in cultures with clearly defined gender roles (Naumov & Puffer 2000:716). If a financial planner is not aware of these cultural nuances and perceptions, then they will not be able to establish a professional relationship with the client, thus hindering their ability to provide financial advice to the client. These notions and findings are corroborated by the following quotations from the interviews:

The religious beliefs of individuals also play a role when interacting with clients. A lack of awareness or understanding of a client’s religion could adversely affect or influence the establishment of a relationship between the CFP^® professional and the client. This finding is supported by the following quote:

While considering the theme of building trust, several subthemes emerged, namely understanding the client, creating trust over time, racial biases and personal finance discussions. From the findings, it is clear that trust must be shown and felt by clients, and an attempt is made by some participants to establish trust within the first few interactions by delving into the client’s life in order to gain a deeper understanding of the client and what would improve their trust. Also, despite certain levels of trust and comfort that are required to engage with a financial planner, client trust is built over time and not necessarily in the first few interactions with the client, or only during the first step of the financial planning process. These findings are supported by the following quotations:

The findings also suggest that there is a racial bias associated with trust, particularly among black consumers, which is consistent with the literature (CFP Board 2018; Sunder et al. 2021:13). It was found that black individuals are more likely to trust a white financial planner than a black financial planner because of South Africa’s history of apartheid and financial exclusion, as well as the wealth and income inequality gap that it created. This perception also exists because in the past, the financial services industry was dominated by white males and that black financial planners were more involved with employee benefits, medical aid and life insurance. Another aspect that may hinder clients’ ability to trust financial planners is the fact that discussions about personal finances may be considered taboo. Matters that are related to money and death are taboo, which is consistent with literature that suggests that it is impolite to include money as part of a discussion (Alsemgeest 2014:516). Atwood (2012:1) states that when individuals feel that talking about money is taboo, they often develop irrational attitudes, beliefs and anxieties about money. These findings are corroborated by the following quotes from the interviews with CFP^® professionals:

The findings reveal that despite having an understanding of specific cultural norms, values and traditions, 6 of the 16 participants found that it is challenging for black CFP^® professionals to establish a professional relationship with clients who are from the same or similar cultural background as themselves. This finding of a lack of similarity attraction regarding culture and ethnicity is contrary to the premise of the ‘similarity attraction model’ which states that clients relate more to financial planners who present similar characteristics to themselves such as age, race, culture and gender (Sommer et al. 2018; Stolper & Walter 2019). This finding is however consistent with studies conducted by the CFP Board (2018:37) and Sunder et al. (2021:13), who found that despite clients being more likely to work with financial planners who share the same ethnicity, there is also evidence that consumers hold biases against black financial planners. Some of the reasons why black clients are reluctant to receive advice from a black financial planner are because of their pride and the fear of judgement about their finances. These findings are also consistent with the notion mentioned earlier about personal finance discussions being taboo in the black community. It was also found that in some cases, black clients are doubtful of the abilities of black CFP^® professionals, despite being suitably qualified to provide financial advice. Black clients are more willing to receive advice and recommendations from a black financial planner if these are verified by a white financial planner or if the black financial planner has been introduced by a white financial planner. In addition, it was found that it is not necessarily because of the competence of the financial planner, but rather the status that is associated with having a white financial planner that makes black clients more attracted to having a white financial planner. These findings are consistent with the prior finding that there is a racial bias associated with trust, particularly among black participants. The findings are further corroborated with the following quotations from the CFP^® professionals:

Five participants revealed that age (similarity attraction of age) and two participants mentioned that gender (similarity attraction of gender) play an important role in establishing a professional relationship with clients. Reiter et al. (2022:13) support that female financial planners are perceived as more trustworthy than male financial planners. Interestingly, these preferences are exhibited by participants who prefer financial planners who share the same ethnicity, particularly among black female clients and younger clients who are part of the millennial generation (born between 1981 and 1996). It is suggested that this is because there is a camaraderie among black women, as they have a mutual understanding of one another and their financial needs and goals. The results also revealed that it is not only younger clients who are more receptive to financial planners but also that younger financial planners are more appealing to some clients because of their approachability. This may not always be the case as it was also found that being a younger financial planner can sometimes be a barrier when providing advice to older clients. Verbatim quotes that corroborate the similarity of attraction findings are as follows: