For most advice teams, Carlos isn’t an ideal advice client.
20 years ago, the Colombian fell in love with a gorgeous Australian working at his local bar in Barichara, Colombia.
They hit it off, he immigrated, and they married.
They started life in her hometown, Bendigo.
She is a dentist, he a writer.
Today, they are separating.
Due to their circumstances, he has become the devoted primary carer of their 10-year-old daughter, Sofia.
His income has been decreasing.
He is a full-time writer.
His superannuation is $135,000.
The advisers from his industry superannuation fund were helpful.
They couldn’t advise him on how he could keep his home.
A friend recommended advisers Matt and Kath.
He engaged them for $12,000.
Why?
IT’S COMPLEX
Financial planning is seen by some as a group of rent-seekers making money from other people’s money, regardless of what happens in uncontrollable financial markets.
Others view financial planners as they view funeral directors, essential at a very specific time of life and ideally never before.
Born from the hybrid vigour of combining sales-based insurance and investment practices, regulatory-based compulsory superannuation practices, and accountants broadening beyond traditional tax practices, it is no wonder financial planning has a complex nature.
The biggest complexity financial planners face is often themselves.
Are financial planning fees determined by effort, by products, by proposition, by competitors, by compliance, by capacity, by referral source?
Not so for Matt and Kath.
Their fees are determined by value.
What people like Carlos value.
Their Bendigo-based advice practice exists for one thing: ensuring every client, including Carlos, is best able to live his unique ‘good’ life.
Matt and Kath conduct a value-find, a Discovery conversation, before the financial planner’s traditional fact-find.
While Carlos’ superannuation fund was empathetic to his issues, their training, skills and compliance are understandably prioritised to align with their busy, high-demand, low-supply production lines.
They miss the detail value.
They always will.
Matt and Kath didn’t.
Nor did Matt and Kath consider their job to ‘sell’ Carlos on their fee, which had less to do with his superannuation balance, the specific effort that would be required, or the number of services he requires.
It was their minimum access fee, i.e. their minimum fee for clients like Carlos.
ITS ALL ABOUT COMPLEXITIES
Advice is about complexity.
Some say advice is about goals.
Some say advice is about investment and superannuation returns.
Others say it’s about retirement options.
Advice is more about the complexities people face in achieving their goals.
More about the complexity due to many options and issues, trying to achieve investment and superannuation returns.
Same with retirement or any significant transition people encounter, either expected (e.g. retirement) or unexpectedly (e.g. ill health), they face in their lives.
Complexities always hinder decision-making.
Advice addresses complexities, providing the clarity, expertise, and, often, leadership needed not only to select the best financial paths toward one’s unique ‘good’ life, but also to maintain them.
Carlos valued Matt and Kath’s engagement because it promises to maximise his chances of living his ‘good’ life.
To retain his family home, to find the best option to buy out his ex-wife, and to provide his 10-year-old Sofia with the security she cherishes about her school, home, and network of friends.
They also promised to find the best option to re-settle his recently widowed mother into their home in Ballarat. She is on level three aged care assistance and hopes to sell her home in Fitzroy and use the excess funds to help her son and only granddaughter re-establish themselves in Bendigo.
Why did Matt and Kath charge $12,000?
That is their minimum access fee for clients like Carlos.
Could it be done for less?
Not by Matt and Kath.
How did Matt and Kath charge Carlos, considering his situation?
They determined payment terms aligned with the expected delivery of advice over the next 12 months.
Could they have taken Carlos on as a ‘pro bono’?
Of course.
Matt and Kath already have enough ‘pro bono’ clients.
Many advisers already have many ‘Carlos-type’ pro bono clients.
That is the complexity the industry has.
Until the financial planning industry understands the value of advice is always determined by the clients, not by effort, not by range of services, not by amount of product, not by past pricing practices, not by regulators and it’s compliance officers, it will struggle to provide the impact it for more Australians desperately seeking to live their own unique ‘good’ life.
How’s Carlos now?
He has a plan to keep his home, re-settle his mum, and look for more work. He and his former partner have shared their hopes about their separation with Sofia. Mediation is continuing.
Most importantly, he feels he is on track toward his ‘good’ life and no longer feels alone.
Where are you with this?
I’ve been writing about value-based pricing all month – Carlos, Joe and Tom, Reine.
If any of these stories have resonated with you, I’d like to hear why.
What’s your situation?
What are you wrestling with?
Jim
Photo Credit: CANVA_photos_MADIl1d5g3Q