I thought I was pretty good at it.
However, my mates used to say anyone could sell shoes when the shop is just outside the foyer of a Hilton Hotel.
“What do you expect? If you’re going to sell fancy shoes, you’re in the perfect spot. Anyone who can afford to stay at the Hilton can buy all the shoes they want.”
They had a point.
You did have to have money to stay at Sydney’s Hilton Hotel in the late 1970s.
There was a price to pay to access the place.
Pricing for access is not just for exclusive hotels.
Access pricing is also for advice firms seeking to grow.
ACCESSING KNOWLEDGE PROFESSIONALS
Advisers are Knowledge Professionals.
They sell intangible things like knowledge, support, care, objectivity, direction and relationships.
Accessing their knowledge, experience, and services come at a certain price.
A price that can only be confirmed by the firm’s clients.
Unlike product professionals, knowledge professionals can improve the direction and confidence of a client’s life in just a few minutes.
They do this because they have built experience advising similar people with similar issues. As they build their experience advising clients, they increase their ability and value of advice.
Unfortunately, many Knowledge Professionals fail to price themselves as Knowledge Professionals.
They feel more comfortable, obliged and constrained to price like Product Professionals.
I call these advisers the knowledgeable but mechanical professionals.
KNOWLEDGABLE BUT MECHANICAL
I had a conversation with a knowledgeable but mechanical adviser recently.
Tom was seeking advice about transitioning a recently purchased client base.
He was planning six months of meetings designed for him and his team to meet and transition his new clients.
But, apart from some stand-out exceptions, he didn’t intend to re-price them during the transition project.
He did not want to be seen as lifting their fees and risk losing some of the significant investment he had just made to acquire them.
Tom is a good adviser but positions his propositions upon a mechanical view of his fee and services based upon ‘what’ he does rather than a valuable view of ‘why’ his clients engage him.
Cheaper hotels are offering ‘what’ the Hilton Hotel provides – accommodation. But ‘why’ people elect to stay at the Hilton and pay their premiums is built upon more than just an accommodation offering.
Tom’s mechanical view of ‘what’ is involved with his proposition causes him to transition new clients as a Product Professional. This is similar to how a rental property manager transfers a recently purchased rent roll of acquired properties.
Knowledge Professionals are not Product Professionals.
Knowledge Professionals engage every client, especially new ones, not mechanically but valuably. Advice is unique to each client and is about delivering greater confidence, clearer forward directions, and providing greater capabilities to them.
Onboarding a new client for Knowledge Professionals is similar to how a comprehensive medical practitioner assesses a new patient.
Before recommending a forward health path, they usually require a more extended first consultation to understand their new patient’s needs, short-term situations, long-term circumstances, and past treatments.
They don’t rely upon past blood tests alone but thoroughly investigate to make their informed advice about what is of value to the patient.
This doesn’t come cheap. It comes with an access price that will only be accepted by the client if they believe it is of value.
Tom’s approach may be expected and understandable in these days of ridiculous regulatory paperwork.
But it is unforgivable if he aims to leverage his knowledge to deliver the value his clients seek.
He only has one chance to properly set first impressions, and these must be built upon what is both most valuable and in the best interests of each client.
MORE ISN’T MORE ANY MORE
More is More for Product Professionals.
For Product Professionals, more funds under management, more high-net-worth clients, more superannuation, more insurance policies, more tax returns, more loans, and more billable hours generally mean more returns.
However, for Knowledge Professionals, more isn’t more anymore.
While some advisers hope the recommendations of the current Quality of Advice Review may mean a reduction in regulatory paperwork, the bigger picture of regulatory intervention suggests that the past nine enquiries (FSR, Ripoll, Trowbridge, Martin, Cooper, Sedgwick, Hayne, Murray, Levy) over the last two decades will continue, and might even gather pace.
Particularly as the nation’s superannuation pools are expected to burst the $7T mark by end of this decade.
Regulation will never lead to productivity gains.
Leadership reform will come from professionals in the marketplace, while regulatory policy will always be reactionary.
The leaders who will make financial product advice more affordable are the Product Professionals renown for their quality products, technology, research, distribution, and expertise.
The leaders who will make financial advice more valuable will be Knowledge Professionals renowned for the value they provide.
Knowledge Professionals have a once-in-a-lifetime opportunity ahead of their firms.
Understanding and building their access pricing is an important step to fund their journey to deliver their clients’ best interests and value.
What do you reckon?
ABOUT JIM STACKPOOL
For over 30 years, Jim has influenced, coached, and consulted advisory firms across Australia. His consulting firm, Certainty Advice Group, coaches, trains, and builds advisory firms delivering comprehensive, unconflicted advice with fees priced purely on value. He is growing a solid and collaborative community of advisory firms aligned on Australia’s only Certification Mark advice standard for comprehensive, unconflicted advice – Certainty Advice. He has authored four books regarding financial advice, with his latest – What Price Value – available now since its release in March 2022.
Pricing Precedent Workshop
What is your minimum price?
An interactive webinar to discuss working models being successfully used by Certainty Advisory teams for the pricing of their minimums for new and existing clients.
There is no ‘right’ minimum as firms and clients are different, but there are common principals underpinning each firm’s minimum pricing precedents.
Non-Clients Fee: $89+GST
Monday, 21st November 2022
11:30 am – 12:30 pm
Sydney Summer Time