How do you know you’ve got the right proposition?

How do you know if you have the right proposition?

You don’t.

An adviser’s proposition isn’t like Coca-Cola’s secret drink formula or Google’s secret search algorithms. Financial advisers are in the intangible business of value definition and creation which varies client by client.

From my 20 year observations of my client’s challenges delivering their propositions, finding the right advice proposition is more akin to finding the right approach to overcoming the challenges of ocean racing where conditions, competitors, attitudes, resources and experiences are all variable thus requiring a flexibility and dexterity in delivery that matches the multitude of conditions.

However, there are signs that indicate your progress towards the delivery of appropriate propositions.  

One of our Sydney-based advisory firms (a two-person operation no less) last week achieved a good signal that his current proposition is working well.

Without any increase in the amount of product purchased by his client, our client achieved an increase in the base relationship fee being paid AS WELL AS agreement to pay for past work performed in the previous 12 months that was beyond the scope of their previous year’s terms of engagement. This backpay amounted to nearly $12,000.

Here we are in amidst terrific financial uncertainty, questionable performances in investment markets, no blue sky on any financial horizon giving glimpses of product strategy so how did our client increase next year’s base relationship fee (click here for  brush up on understanding of relationship fees) AND secure agreement to backpay of services delivered in the past 12 months that were beyond last year’s terms of engagement?

He did it firstly by having the professional courage to back his proposition and secondly by having the right proposition for the right client at the time.

Fundamentally our adviser tapped into the uncertainties plaguing his client which threatens his ability to achieve what’s important to him. Being able to articulate the relevance of  their advice relationship  in context for him to best overcome the financial challenges was central to both next year’s increase and last year’s debt.

Was the client happy to pay the extra fees? It’s like the orthodontic account I received last week for braces for daughter #2 – am I happy to pay that bill? Whether the client is happy or not to pay the bill isn’t relevant. Like my orthodontic account (no, I didn’t expect we’d be paying for daughter #2 as much as already paid for daughter #1 and #3 as thought her teeth looked OK) it’s not whether I’m happy with the bill but whether I see it as a good investment.

Getting your proposition right is tough, but there are no better times to be experimenting with what your clients and you believes represents value.

Also, beware that too much focus on any one sign that your proposition is working is as useful as too much attention to any one gauge of your car’s dashboard (i.e. client satisfaction is good but in balance with business growth, or niche development is good but you don’t want to specialise in a niche that you don’t professionally enjoy).

What do you think ?

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