Earlier this month, we ran a workshop with values-based planning guru Bill Bachrach.
185 advisers from around Australia and New Zealand gave up their Saturday and came along for an intensive skilling day, to understand some of the concepts behind Bill’s value-based planning approach.
Most of the attendees had already started the journey towards making a more ‘thorough’ and industrialised connection with their best clients, but most also left the workshop knowing that there was more to do.
We’ve been fans of Bill’s approach since we started relying upon it in October 2004. Based on the results our clients have gained by focusing on this method of values-based engagement (and annual re-engagement) with their best clients, our commitment to the approach has only increased over time.
In fact, we now believe that to be able to charge a premium for advice, advisers and their firms have to industrialise how they ‘attach’ themselves to the financial lives, beliefs, hopes and objectives of their clients. Relying solely on an adviser’s personality to ‘attach’ to a client’s life is about as successful as relying solely upon someone’s good faith to be compliant.
Due to our technical training as advisers and/or the compliance regimen of our firms, ‘attachment’ to many advisers means understanding their clients’ financial situations, balance sheets, earnings, tax positions, loans, risk profiles, preferred asset allocations and other ‘financial’ information.
‘Attachment’ is a broader concept.
To put it into an equation consider “The Attachment Formula”:
Financial Attachment = Financial Knowledge + Financial Care
Most advisers are good at the Financial Knowledge variable. They have proven financial fact finders surrounding the client’s financial situation, and they build adequate financial knowledge about the client. Thanks to Financial Services Reform (FSR) legislation, the client financial fact-finding process has significant and mandatory rigour.
The Financial Care variable, however, is still comparatively dependent on an individual adviser’s personality. Care is not yet as mandatory as compliance, unfortunately.
Some advisers are naturally good at financial care, whereas others don’t see it as a requirement for good advice. Financial care is, however, a requirement to earn a premium for your advice.
Financial Care is placing an adviser’s Financial Knowledge of a client into a proposition that provides a meaningful outcome for the client, and then doing everything to the best of the adviser’s ability to ensure that proposition is achieved.
It’s not just about understanding a client’s circumstances. It’s about then using that knowledge to do everything possible to ensure the achievement of outcomes important to the client.
The ideal proposition for financial advisers is doing everything possible to maximise the probability of clients achieving their financial goals.
To earn a premium for advice, the proposition has to be a benefit for the client in the client’s opinion.
Also, every time an adviser or adviser’s support team touches a client file, their work focus should be realigned to the client’s context, i.e. what the client is seeking, rather than simply what the adviser and team are doing.
If the adviser’s work can’t be clearly, consistently and repeatedly put into the client’s context, it will be hard to command a premium for the advice work performed.
Many advisers confuse building attachment and building rapport. Many advisers, due to lack of skilling, leave building attachment to those regarded as more talented at remembering names, making small talk, greeting strangers, speaking in public and exhibiting other talents perceived as essential for sales success.
However, many ‘like-me-then-you’ll-buy-me’ rapport-building type advisers aren’t seeking to deliver long term financial care. The only financials they are concerned about are their own.
Attachment should not be confused with a desire to make more friends.
Advisers don’t need more friends, nor do our clients. One of the bases of attachment is an adviser’s understanding of what famous humanist Abraham Maslow would refer to as the client’s “hierarchy of needs”.
Advisers need to extend their traditional fact finding client conversations to understanding and knowing the client’s values and motivators, not only their financial numbers. These conversations take skill and practice, and will inform a new generation of advisers.
Attachment is built through asking the right questions in the right way and continuing the right depth of ensuing conversation. It’s built through the ability of the questioning adviser to focus on understanding the client’s outcomes, rather than telling clients about their own talents and skills.
Great advisers can naturally ‘attach’ to clients and they don’t need ‘techniques’. The future of the advisory profession can’t rely upon a minority of great advisers.
New advisers particularly need to be skilled in the humanist variable of the attachment formula as rigorously as they are in the knowledge variable.
Pioneers like Bill Bachrach have long known that knowledge may be power, but caring is far more empowering in an adviser-client relationship.