Engaging Financial Advice Clients: It isn’t in the details, is it?

I was speaking last week with a purchaser of my latest book – Delivering Certainty.

He says he enjoyed the book – thank you – BUT (there’s often a but…) he’s found that my proposed ‘Terms of Engagement’ letter used to engage the client didn’t contain enough “meat and potatoes” for his clients to “see the value [he was] planning on delivering”. He had some suggestions on how to improve the template.

“Have you given any thought to changing your Terms of Engagement letter to put some scenario planning in there?” he asked.  “I’ve found that bit extra really works a treat and nicely rounds off your template.”

“Yes I have. Given lots and lots of thought to it. Tested all sorts of variations and seen a myriad of other examples from all types of financial advice firms of all sizes, serving lots of different clients, across the whole country. I think about it often, in fact”, said I.  

“So you agree it might be OK to add in something in there, because really it doesn’t say exactly what we are going to do, does it? It doesn’t have a lot of the detail as is. Don’t you think it doesn’t really tell what we’re going to do?” he asked.

I can’t agree.

For too long financial advisers’ propositions have been about the specific approaches we’re going to take or tasks we’re going to perform and not about our role as advisers.

This adviser truly believes that trying to engage a client with a Terms of Engagement structured like the sample provided in Delivering Certainty is too difficult without some ‘what if’ scenario planning to show in detail the value that he can add.

Do we hire accountants because they show us in detail, upfront, how they can save us the most tax?

Do we play doctors off against each other each time we’re sick to make them prove which one can get us healthier quickest and at the lowest cost?

Do we marry someone because they look good in the designer clothes they’re wearing today?

Yes, I agree, some of these questions might appear a little ridiculous.

My point is that financial advisers today still place too much weight on ‘proving’ their credentials based upon the performance of their offered financial products, or based upon how they can demonstrate a clever investment, insurance or tax strategy that saves their client money or makes them extra money.

It’s like a pilot showing all the prospective passengers her flight plan as a means of convincing them to engage her as their pilot.

It’s like a barrister doing all the research and showing all her reasoning about how she might approach a case before she’s got the case.

The delivery of financial advice in Australia in 2013 and beyond has to be underpinned by a significant renovation in advisers’ fundamental beliefs. Beliefs, ideas, approaches will forge the new financial advice profession, not regulation, not better performing financial products, not new dealer groups.

The sample Terms of Engagement document provided in Delivering Certainty is far from perfect. It’s only a tool.

It’s been designed to show three things – firstly, and most importantly, the WHY we (advice firm and client) might work together in the coming year and beyond. Secondly it highlights, at a high level, what the advice firm believes is necessary to achieve the aforementioned outcomes, and lastly, it shows the proposed annual fees and terms.

By intent the Terms of Engagement is designed to be produced quickly, without specific product advice, setting the framework for the effective management of an advice firm working with clients to best achieve their outcomes.

But like any tool, used with the wrong beliefs, in the wrong hands, it simply won’t work, and in fact, could do harm.

Yes, of course you can mould it (that’s why we make it available) to be more your firm’s Terms of Engagement. But adding unnecessary detail reflects more on what we believe our value proposition is – the WHAT we do – than it does on WHY the client is engaging, which is, ultimately, to achieve their outcomes.

What do you reckon?

Image courtesy of renjith krishnan / FreeDigitalPhotos.net


About Jim Stackpool

For nearly 30 years Jim has influenced, coached, and consulted to advisory firms across Australia. As founder of Certainty Advice Group, he leads a like-minded team of professional advisory firms seeking to create greater certainty for their clients. As an author, blogger, columnist, and keynote speaker, Jim is regularly called upon for his professional insights into the advice industry. His latest book Seeking Certainty is available now.

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