Why demonstrating value – not cost – is key for today’s advisers
In attracting fresh clients, advisers need to position themselves as architects who deliver a personalised service, suggests Lawrence Cook, director of marketing and business development, Thesis Asset Management
Advisers have faced a number of challenges to their operations post RDR, not least the change to how they are remunerated. Some have responded well and have fundamentally transformed their business models in recent years, while others still have some catching-up to do.
But for all advisory firms, one big question stands out – what do firms need to do to demonstrate their worth to clients?
To better understand this area, we conducted a poll at our recent conference, which looked at what advisers felt were the main reasons for consumers not to seek financial advice. The results were illuminating: 77% of advisers believed it was because clients saw advice as expensive. However, at the same time, only 4% of those surveyed felt would-be clients were not getting financial advice because they were confident enough to manage their own finances.
There is a paradox here: on the one hand, advisers feel there is a need for advice, as well as the reassurance that comes with having a dedicated professional looking after a client’s needs. On the other, there is an unwillingness to pay a high price for these services. So what is the solution? Is there an opportunity here for advisers?
The answer lies in demonstrating the value of their proposition rather than the cost. Many other services work in this way. For instance, few would dispute the value of paying a contracts lawyer to draft a binding agreement. While it might cost money, the client benefits from knowing they are in the competent hands of a professional, where they might otherwise be out of their depth.
Since RDR, the market has moved away from a product-based approach to a service and solutions focused outlook. While in the short term this may have affected revenue streams for firms, over the long term, it offers an unprecedented opportunity for advisers to really engage with their clients and help them define their financial goals and aspirations.
Advisers need to show how they can offer a personalised service, and the traditional ability of advisers to develop strong personal relationships where they have a deep understanding of the client’s circumstances is set to take centre stage. They also need to take into account the clients’ lifelong financial objectives. Successful advisers will need to demonstrate a ‘broad brush’ of financial planning which covers a range of areas, instead of focusing on a single area, such as pensions. It is also a great benefit to clients that any recommendations are personally suited to the individual, and their tolerance of risk is continually balanced with their long-term objectives.
Advisers should also position themselves as ‘architects’ and consider ‘getting the builders in’ where necessary: in other words, working with other professionals to deliver the services their clients need. Outsourcing to DFMs for investment is one way that advisers can demonstrate value as it gives the client access to specialist research, analysis, portfolio construction as well as rebalancing. If the DFM doesn’t deliver, the adviser can select a different one on behalf of the client.
Therefore, financial advisers need to be able to demonstrate through the above points that financial advice is a valuable resource worth paying for. A holistic service, which makes use of a range of professionals, is an effective way to achieve this.
Visit the Thesis Asset Management website