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Advice and Client Service: The New Financial “Product”


Advice and Client Service: The New Financial “Product”

Financial advisors who want to prepare for the massive industry changes, have to start by changing their mindset.

Financial advisors are struggling to understand some of regulatory, technology, pricing and consumer changes in the industry. But the real change they must embrace is the product has changed. It is no longer about getting paid to sell mutual funds, life insurance or any related products. The product has changed to planning, advice and servicing clients to help them reach their goals. What products do you sell?

Future ready and fee ready advisors

The advisors who have shifted their mindset to getting paid for advice and servicing their clients have prepared their business for the future. They have delivered 100% transparency on cost and fees, and have demonstrated their value by articulating what clients receive for the fees they pay. Their conversations with clients are the complete opposite of what successful advisors have done in the past and the results have been staggering.

Fee ready financial advisors have grown significantly faster than non-fee based advisors. I can quote several sources, but the best source is asking successful advisors what has helped them grow their business.*

The consumer response is favorable also. Client satisfaction, client retention, and client acquisition dramatically change when 100% transparency occurs. For example, one exercise I teach advisors is to complete a fee audit for prospects, which discusses the total cost in dollars and percentages clients are paying their advisor, but more importantly what they are getting, and NOT getting for the fees they are paying. How do you feel when you are paying for something and not getting it?

What clients are NOT getting from their advisor

In a recent workshop, I asked a group of advisors to name what prospective clients are not getting from their current advisor. Here are some of the answers:

  • No comprehensive plan that covers areas such as tax, estate, risk management, insurance, debts, cash flow, health, and only focuses on investments
  • No clear understanding of the client’s values on paper
  • No clear understanding of the client’s goals in writing with the exception of one, retirement
  • No understanding of total fees ( investments and advice) and complete transparency, as clients are even more confused by CRM2 statements

The list was long and the discussion could have gone on for hours, as it is clear, that advisors know what the clients are NOT getting, but the critical problem is this. Do the clients know what they are getting and not getting? Do they care? Do a fee audit to find out.

Start with a Fee audit

A fee audit is not about cost, but about value. As Warren Buffet says, “price is what you pay, value is what you get” Build your process with feedback, value, and transparency to get an edge on the client experience.
Now when you sit down with prospects consider this exercise and discussion. Ask “ Can I do a fee audit for you to help you understand how fees impact your planning and the total cost in dollars and percentages? Would it be valuable for you to understand the total cost of what you are paying, what you get for those fees, and what you do not get?

Related: How to Implement and Use Client Feedback to Grow Your Practice

Key prospecting discussion

Get in a habit of people you come across every day if they understand the fees they are paying. Ask them to explain the fees as they understand it. Then ask” would you be open for me to do a fee audit for the last five years to help you understand the cost (or fees) and benefits? I ask because we do this for your clients so they understand the measurable benefits of our advice along with our immeasurable benefits that our planning offers such as peace of mind and simplicity of their financial life.Your clients appreciate more comprehensive planning advice through our progress update meetings 2-3 times per year, an annual planning checklist, tax planning, estate planning, financial planning and investment planning ( what services you offer) in writing, does this make sense to you? Our clients have comfort knowing it is taken care of, so they can go on and enjoy the things that are important to them”. Now you have the start of a process to discuss your differences with prospects. The new product is about planning, advice, and services to help people reach their goals.

Practice makes perfect

Do you have scripts that you use with prospects to complete a fee audit? Do you have a clear detailed process for making your client’s fee ready? If not, who is helping you who has a proven process to help you get there? Find someone who has a proven process and has the time to help you get there. It is not just about content, but it is about practice. Who is helping you practice your scripts? Do you record your practice sessions? Imagine if the “Rolling Stones” band never practiced and only recorded once? Do you record your meetings with your client’s permission? Find a coach, mentor or manager who can help you build your process and help you practice your communication skills to articulate your value. Now go out and practice your fee audit conversation, build your process for converting prospects and providing measurable and immeasurable value to your new clients.

*source: Strategic Insights, Financial Advisor Channel Feedback and Market Share – June 2017
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