Still quoting your comprehensive advice in parts?
Don’t.
Here’s a better way.
Sally lost a client, a $15k prospect, last week.
She was disappointed.
Mainly for them, as their issues are significant and their options are tough. They need so much more than a cheaper SOA.
But first, a related story.
We’re renovating.
Our first verbal building quote was just below my wife’s budget – she immediately liked that builder.
After six months of revisions with this builder, the first written quote arrived last week.
I thought the guy had confused our second-story, new bedroom job with a total knock-down rebuild?
No.
So why had the original quote tripled?
It’s been six months.
Costs have increased.
OK.
This brings us back to Sally’s $15k prospect.
You see, the first thing Sally’s prospect asked when she presented her $15k advice fee was for a breakdown of her fees.
He wanted to understand how the fee was calculated.
A reasonable request.
So, Sally, being reasonable, supplied a breakdown.
This triggered another conversation.
Followed by some more emails and another conversation or two.
These exchanges were all about the components of her approach (i.e. the investments, the insurances, the estate structures). Some were about the timing or necessity of each element. Some were about how the implementation might be prioritised, delaying parts for the future.
Last week, after a couple of months, Sally received the “…thanks by no thanks” email.
The prospect had found a cheaper advice alternative.
Back to our builder.
When my wife asked for a breakdown of his quote, he responded differently to Sally.
He turned into a value-creator, not a builder.
His first question was, “Which part of this work is most valuable to you?”
For my wife, that’s easy.
The part that provides space for our overseas kids to visit, bringing our future grandkids.
Our builder didn’t attempt to break down his quote into the components of his work.
He focused on what we valued.
Same for comprehensive advisers like Sally.
Sally believes in comprehensive advice as the proven means to serve the best interests of her clients – she isn’t comfortable advising only on a part of her clients’ financial lives.
However, as soon as she responded to a reasonable request for a breakdown of her fees, she positioned herself as a provider of different products and services rather than a value builder.
By positioning her fees into different components of her advice, rather than different components of what the client values, she lost her positioning as a value builder and, worse, put her proposition onto a slippery slope of product and price comparisons.
Fees are about value, not advice.
Of course, Sally’s advice and recommendations about investments, risk, cash flow, structures, and property are valuable and crucial.
But helping comprehensive clients assess fees should never start with the components of advice. It must focus on the elements of what they value and/or the significant consequences of not taking comprehensive advice.
The Compare-the-Pair campaign is clear evidence that there will always be product-marketers who care more about being ‘cheap’ and less about the best interests of clients than advisers like Sally.
Comprehensive advisers like Sally must position themselves, their fees and their expertise by leading every crucial client conversation with a clear focus on what they value rather than specific products or services they may need.
What do you reckon?
Jim
Photo Credit: iStock – travellinglight – 176961237