Clients pay for your Opinion!
I always read with interest articles about the way financial planners (should) charge their clients. If you scroll to the bottom of the article and read the comments, there is always no shortage of debate (ie vitriol) that occurs between parties who look to defend their patch, whether that be commissions, percentage based fees, hourly rates and fixed fees. In most cases those leaving comments are missing the basis of the article, and simply look to use the article as an opportunity to point score. Having said that they are always amusing!
As an industry, most participants now accept that receiving remuneration for not doing anything is not a good look. Who would have thought? Where we continue to get stuck is actually agreeing what clients should be paying for when it comes to financial advice, and the delivery of financial products. I have obviously deliberately broken up these two pieces of work, and for the purposes of this article I will focus on financial advice. Further thoughts on the delivery of financial products can be found here: https://www.smythefm.com.au/can-put-lipstick-product-selling-still-product-selling/
You can dress this up a number of ways but no matter which professional you seek advice from (eg Doctor, Lawyer, Accountant, etc), as a client what you are really wanting from them is their opinion. That’s right clients pay you for your opinion! As earth shattering as that sounds, the basis of a professional relationship has not changed too much over the centuries. While new financial products have come and gone, it is actually your opinion that sets you apart from the next adviser.
The value of your opinion can obviously only be determined by one person; the client. When a client sits in front of an adviser for the first time, or contacts them as an existing client, they are seeking their opinion. It could be an answer to a specific question, the confidence to make a decision, the support to change a behaviour, a solution to resolve some complexity, or simply some “tough love” to put some perspective in their life. In every situation when a client comes to a financial adviser, it is because they are seeking your opinion, and they trust that your opinion is better than the other adviser.
When it comes to charging for your opinion, again it is the client who will determine whether what is being proposed is valuable. The industry can jump and down for as long as it likes about how much advice costs. However, if the client doesn’t value the opinion of the financial adviser then there is no way they are going to pay for it. As is often quoted by Jim Stackpool, “Clients pay for things they can’t afford all the time because they value it.” Think about the houses, cars, holidays, etc clients pay for all the time.
If clients perceive value in the opinion of the financial adviser then they will pay for it. They won’t pay an ongoing advice fee for the bells and whistles of the new superannuation fund being recommended, or the online reporting for the latest investment platform. That ship has sailed, and for those still clinging to that boat, best to hold on tight!
Next time you are sitting in front of client seeking their ongoing engagement remember the true basis for a valuable client relationship. Make sure you express your opinion, and always share it with your clients, and don't just save it for leaving a comment at the end of an article about fees.