Margie contacted me seeking advice.
She had an extraordinary business model built upon one of the most fanatical commitment to serve her clients, I’ve seen.
SERVING THE PUBLIC GOOD
For her own reasons, Margie preferred to spend the first few meetings with potential new clients as part of her due diligence free of charge. She reasoned this helped her determine how and if she could assist. She believed she needed a few meetings, which predictably had virtually every prospect become a client, just as much as her prospective clients did to determine if the relationship was in the client’s best interests.
Unsurprisingly too, Margie had a strong flow of new enquiries. Her preferred and natural niche were single women. Mothers or divorcees, widowed or young women, small business owners, spinsters and grandmothers. Her services ranged from cash flow advice, savings plans, superannuation advice, pension planning, aged care and having lots of cups of coffee.
Margie is a single mother living with her elderly mother and two school-age children.
She also found time to mentor several up-and-coming female advisers through her local chapter of an industry association. She felt a strong need to give back to the profession and also reasoned that someday one of them might join her and potentially be her succession plan once she was in a better position to afford someone.
Margie worked long days which didn’t end when she went home to make dinners for her family and help with the homework. She spent most nights after family time on the computer following up on meetings, handling paperwork, addressing emails and preparing for the next day’s rerun of previous days.
Her only employee was a former client who had run out of luck with her health and bad relationships. The lady’s health made her working hours unpredictable often when Margie needed her the most. She had good office skills, but no financial services experience.
Margie had served on various industry associations, was a volunteer on several causes and always accepted opportunities to speak at industry events. Being well qualified, she donated occasional evenings to lecture and tutor students learning to become financial planners at a local technical college.
Margie has a heart of gold. However, the increasing compliance, the increasing level of enquiry, the increasing difficulty finding the free cash flow to afford required support while continuing to meet the expectations of existing clients is slowly killing her.
Advice is built upon character first and reputation second.
When news headlines damn the reputation of financial advice with a scandal of more providers being exposed for focusing on their interests before those of their client’s interests, the number of new enquiries Margie receive increases. Unfortunately for Margie, the brighter spotlight on poor industry practices only attracts more enquiry which feels to her like the intense beam on the unfortunate bunny in the sights of the hunter.
Margie is addicted to accumulating additional expectations, to serve the public good and the good of her clients regardless of the personal and business costs.
Addictions rarely work out by themselves. The industry has done a poor job supporting the careers of advisers like Margie. Like many others, while her devotion to service is admirable, Margie can not afford to offer a proposition that resembles social justice while hoping “one-day” things will improve when she will be able to work her way forward to achieve what she not only wants but needs for herself and her family. The irony of building a reputation of great advice but failing to take her own is not uncommon.
There is no question that the advancement of financial advice is based upon advisers serving the public good in all their actions. Much of the demise in the reputation of financial advice can be traced to the industry’s loss of focus to firstly serve the greater public good.
However, if advisers like Margie do not institute a minimum fee based upon her demand and at least a 10% cap on the number of advisory clients to whom she can offer pro-bono-like services, firms like Margie’s will handicap not only their ability to serve the public good but their clients and their good.
Like medicine, financial advice is not just for those that can afford it. Every financial advisory team should have an element of pro bono advice to ensure the advisory team doesn’t lose sight that like doctors, financial advisers are to serve the public good first before their clients and their own. But to only serve the public good like Margie, places advisory teams in confidence-crippling situations where no one is caring for the carer with sad and predictable ramifications.
Establishing minimum fees and limits on pro bono is difficult for many advisory teams. If it feels easy, the limits are probably too low. Without limits, firms quickly resemble a car that has lost its steering while trying to navigate the congested highway of business life.
It won’t end well.
What do you reckon?
This is an extract from Jim’s latest book – What Price Value – due for release Spring ’21
ABOUT JIM STACKPOOL
For over 30 years, Jim has influenced, coached, and consulted advisory firms across Australia. His firm, Certainty Advice Group coaches, trains and is building a growing group of advisory firms delivering comprehensive, unconflicted advice, priced on value. The community of advisory firms aligns with Australia’s highest and only ACCC/IP Australia Certification Mark standard of comprehensive, unconflicted advice – Certainty Advice. He has authored three books regarding financial advisory firms and is due to release his fourth book mid this year – What Price Value.