30 Oct Worried about having to charge more for your advice?
There is so much change happening for advisers right now that you could be forgiven for falling into the trap of introspection and worry. You may be juggling thoughts of compliance, education requirements, rising costs, obsolete (or inadequate) pricing models, falling business valuations, licensee issues ….. all the while trying to do your best for your clients. It’s times like these that can really test your resolve and your passion to build a business delivering great quality advice to clients. And yet, there has never been a more important time to do just that!
If you’d like a break from reading compliance updates and FASEA guidelines, and you want to read something much more uplifting and inspiring, I highly recommend getting hold of the 2019 Value of an Adviser research report from Russell Investments, or the recently released ASIC Report 627 – ‘Financial Advice: What Consumers really think‘. I’m serious – this is a publication from ASIC that is indeed, uplifting! It confirms what you already knew – that while the statistics from the general public showed significant levels of distrust in the financial advice industry, ” people who had recently received financial advice had more positive attitudes towards financial advisers than those who had not recently received financial advice”. What may surprise you, is that less than a year after the Royal Commission into Financial Services, 41% of Australians intend to get financial advice in the future, and 25% in the next 12 months. That’s great news for businesses wrestling with the challenge of replacing or transitioning grandfathered revenue that’s being switched off… if you’re unlikely to convert enough of those previous ‘customers’ into fee-paying clients, you’ll be inspired by the opportunity to service new clients for whom you can deliver value. This news might be inspiring for some, but also a little nerve racking. For many of the businesses we’re working with right now, finding new clients is not a problem – it’s efficiently, compliantly and profitably servicing those clients that is the current challenge.
As thoughts indeed turn to running sustainable businesses without grandfathered revenue in future, we’ve been working with even more businesses than usual on their pricing models, and we are consistently finding an overarching realisation for many, that they are now in a world where every client needs to be serviced on a profitable basis (or intentionally pro-bono). For many, that will mean charging more than they have in the past because they won’t have trails subsidising their cashflow in future. And to survive, not only will they be charging new clients more than they ever have, they will likely need to lift the fees of their existing clients too.
What does that mean? Not necessarily that advice will become unaffordable for those who need it – don’t get caught in that rhetoric.. but what it does mean is that you need to develop your ability to demonstrate value, to DELIVER on that value, and to …
…propose your fees at the right time in the right way to secure the right clients who will enjoy a mutually beneficial relationship in future with you – where both of you will get a great return on investment from working together.
Sometimes in order to do this, we find that means helping advisers to tweak their ongoing advice offer, or maybe their client review experience – sometimes we help advisers reinvent their whole new client experience and the breadth of services they provide…. and sometimes all that’s really needed is for the advisers to recognise just what a valuable service they bring to their clients. Especially in times like these, it’s easy to fall prey of the noise around you and feel undervalued – then fall into the trap of doing it to yourself by undercharging for your services. Confidence is required to charge what you’re worth, and if you’re feeling overwhelmed, under threat and questioning your abilities as an adviser, you need to get some help with this, or you’ll struggle to get out of that downward spiral that will make business growth and profitability impossible for you.
I’d like to give you just two thoughts to help you with that inner monologue.
- Consider the fact that the ASIC research also found that of the top ten attributes consumers cited when choosing a Financial Planner, only 20% of the group who intend to seek advice in the next 12 months considered low cost to be an important decision making factor. The three highest rated attributes for this group were ‘They take the time to get to know me and my goals’, ‘They talk to me in a way I can understand’ and Level of experience. Rather than spending time worrying about how much you need to charge, consider how your New Client Experience and the way you communicate with clients measure up against these highest priorities of prospective clients seeking advice? Remember that oft-quoted saying that price is only an issue in the absence of value.
- Let’s think about what you do from the client perspective…think for a moment about what’s going on in the lives of your potential clients right at this very moment. Some people are stuck in the office working late yet again, others are enjoying a holiday, saving lives, tending to children, or meeting with friends or business colleagues. Some are attending funerals, some weddings, still others may be meeting new lovers, or enduring a relationship breakup. While you spend every day (when you’re not thinking about how to improve your business), speaking with clients about how to achieve their financial goals, and you think constantly about contribution strategies, investment markets, bond yields, risk/return ratios, tax rates, deductible amounts, your clients spend every day consumed by their own ‘stuff’ in their life – relationship, career, children, family, health.
The stuff you deal with every day – that comes second nature to you – is completely foreign to them. Could they learn it? Possibly. Do they want to or have time to? No – so when they’re ready to get more from life, they’ll want a financial adviser who can indeed take the time to get to know them, perhaps even help them get to know themselves and their relationship with money a little better – and then to do all that technical financial thinking and research for them and let them know exactly what they need to know to make informed (great) decisions – that’s what they’ll pay you for!
Sooooo… yes, business valuations and cashflow have dropped – for some it’s very recent and their value has dropped by a lot. It’s okay to grieve for that, and feel angry and let down by those who were supposedly in this game with you… BUT don’t spend too long in that headspace – it will not serve you.
When you’re ready to move forward … and you embrace the fact that it’s up to you to protect and grow the value of your business…. don’t underestimate how clever you are – and what brilliant work you do. Make sure your value proposition is one not grounded in product sales, but rather one that allows you to deliver what your clients really want and need.
And learn how to charge appropriately for it – so you can set about not only rebuilding the value of your investment in your business, but ALSO your net cashflow so you can reinvest outside your business as well.
If you’re not sure how to do that, we’d be happy to help… we’ve recently expanded the team with our new fabulous Consultants, Andrew in Melbourne and Graham in Sydney. We can either support you privately (one-on-one) or we’re now taking Earlybird bookings for our February Blitz program. Come join us… we’ll help bring the fun (and the future) back to your business!