You don’t build an advice business but just dispensing easy advice.
You build your advice business by successfully delivering the hard advice because that’s the advice that usually counts most. It’s hard to be confident that your clients really are ‘advice’ clients if they have only ever taken the ‘easy’ advice you’ve provided.
During booming stock markets up to 2007/8, financial advisers who had converted to advice-based business models (i.e. fee for service) sat back and watched their firms flourished. Many believed they had found the foundations to build great advice businesses. But, they were delivering relatively easy advice.
Just like you don’t become a sailor but just sailing calm waters, these firms didn’t become real advisory firms by just being in the right place at the right time. It’s little wonder that these same firms have tremendous difficulty attracting clients when the advice is hard due uncontrollable economic conditions.
It’s inevitable during long term financial advice relationships that your advice will be challenged or your advice will be challenging to your clients.
It’s also normal for your advice clients, not to take every piece of advice. But it’s not an advice relationship if they continually reject the hard advice which your firm fundamentally believe is required to best maximise the probability of them achieving their desired outcomes.
For instance, say a client is chronically overweight in personal non-tax deductible debt and your priority advice is the reduction in that debt by changing spending habits or liquidating assets. If they disregard what you believe is the cause of their problem, whilst insisting that your job is to find them a lower interest rate, it’s wrong to refer to these people as an “advice” clients.
An important criteria for an advice client is they actually take and act upon advice provided. Particularly when that advice is hard to accept, implement, contrary to their existing beliefs or requiring a change in how they live.
What do you reckon?