Practice management: Putting your money where your mouth is

Remuneration is certainly the buzzword of the moment. It’s topical, highly relevant and, what’s more, it shows that as an industry we have some critical issues to address in the coming months.

It has started to concern me, though, that there is much less debate around the value provided to clients for this remuneration. Advisers clearly know when they provide tangible and intangible benefits to their clients, but do your clients really know and appreciate what you do for them? Maybe it’s time to revisit both what you provide and how you package what you provide, to your clients.

Research by Business Health has shown that advisers are poor judges of which services clients value. In fact, clients derive value from many things our industry has traditionally emphasised.

The review, as an example, may seem like a simple process to an adviser. However, a client may not fully appreciate why a review is so important. What do you do to make sure the client knows the review will take place? Send them a snapshot of their situation prior to the review to prepare them for the meeting? Or is a document sent to them after the review to confirm the service that just took place? And what do you do afterward to remind the client of the importance of reviewing their plan each year?

While many advisers provide well-presented, well-defined services, I believe there is a clear opportunity being missed by many to show the client the true value of the relationship and to support the reason they initially commissioned you as their adviser.

After all, people are more informed of their choices today than ever; what is to stop them going to a competitor who presents a comprehensive advice value proposition? Or worse, attempting to look after their own financial affairs without having the necessary knowledge and experience?

The root of this problem is that financial advice is essentially an intangible product. It can seem quite elusive for some, can appear expensive to others and it’s not something you can touch or physically take home with you, making it all the harder to communicate a value proposition.

What do you need to do to help clients understand the value you provide?

Firstly, list and review. Ask staff to list all the services you and your office provide. Then ask clients to rate your current services. Learn from this what they value and what they may be largely unaware of. For example, if a client doesn’t realise that you review their funds quarterly, you may need to establish communication along the lines of, ‘Our quarterly review of fund performance of your holdings shows things are travelling well, there is no reason to adjust your portfolio at this time’. Many practices carry out a wide range of services that are almost invisible to the client, so be visible!

Secondly, determine any unique services or attributes your office brings to a client and shout it from the rooftops. For example, ‘At Smith Financial, we offer a free consultation to anyone you refer as a result of our advice’, or ‘At Jones Group, we love nothing better than the challenge of helping you transfer your UK pension’. Or, ‘At Evans Group we look forward to working with you closely over the coming years to help you monitor and meet your monthly cash flow needs’.

Thirdly, package your promise. Once you identify what services you provide, and where you are unique, use your branding to give a theme to these services. Think about how you look from a client’s point of view and ask yourself these questions:

1. Is my service promise clear and appealing?

2. Is the presentation of my brand consistent across all messages given to clients?

3. Are the important aspects of my value proposition present in tangible materials we give to clients?

If you knew what your clients truly valued about your services, what would you do differently? For example, if your research showed clients loved your staff, you might change your business process to get them more involved in client contact then highlight this process in your company brochure. For instance, ‘Our capable team gets involved at every step of the way to ensure you benefit from our depth of experience’.

If clients love something about your service, make them advocates. I know of one practice that gives clients a smart leather folder then, each year, sends the clients the tax preparation documents they will need in order to see their accountant. Do you think that accountant refers other clients to the business? You bet — and with the comment, ‘I wish all my clients used this adviser’.

For some, presenting a tangible value proposition will not be a quick and simple process. It is, however, a journey we will need to take to further support the offering of strategic advice and ensure clients understand our value.

Talk to your clients. Ask for their feedback. Package your services so that you, your staff and your clients can understand and clearly articulate them. This is the key way to differentiate and grow your financial advice services into the future.

With this in mind, the debate as to how you are being paid, — commissions, asset-based fees or dollar-based fees becomes — somewhat irrelevant, they are just billing systems. What is the point of debating the way we get paid if a client does not understand the reasons behind why they are even paying us?

Where the client is concerned, it’s time to focus on value rather than price.