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Should Financial Advisors Stop Selling Service?

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Should Financial Advisors Stop Selling Service?

Professionals sell time and knowledge primarily, however our dilemma is that in order to escape the transactional nature of simply selling units of time we promise to provide an ongoing service.
 

Our hope is that clients will value this ongoing service…but our expectation really is that clients will only value this ongoing service once they actually experience it.

In order to convince clients that our service is indeed valuable and worth paying ongoing retainers or annual fees we create expectations – or promises – of the additional value we will provide over and above the value already delivered and paid for.  The problem is the rapid shift in service level expectations generally – and our inability to change our business offering until it is potentially too late.

In general terms consumers expectations of speed of service are shifting faster than we can deliver professional services.  Influenced by social media and the speed of interaction that it encourages, together with gadgets with ever increasing processing speed and memory and functionality, and a strong shift to businesses being available 24/7 and we are faced with exponentially increasing customer service expectations.

Even if we continue to deliver our ongoing services precisely as promised originally, and there is no deterioration of service delivery on our part, there is a continual widening of the gap.  Increasing expectations result in the perceptions of our service as being inadequate – even though it is exactly what was promised.

The problem is not necessarily our service delivery.  It is the clients expectations of what our service should be in comparison to all their other commercial service experiences.
 

This is further exacerbated by the consumers definition of “service” being constantly subject to change.  Service historically meant being able to provide specialised knowledge on demand (which they now pretty much have on the phones courtesy of Google, IBM Watson and so on).  Or it was competing on convenience (we’ll drive to you in the evening and meet in your home), or filtering market choice to determine appropriate product selection, such as in investment advisory or insurance broking fields.  There are now apps and online services that fulfil these functions far more quickly, affordably and efficiently.  The key point of course is that what was considered “good service” 15 years ago is not what was considered good service 10 years ago or 5 years ago.

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Maybe we should stop selling service?
 

I am by no means certain that I know what the solution is to this selling service dilemma, as I can only see the gap widening further as the world gets faster with its proliferation of apps, boutique services, crowd-sourced labour solutions and breaking down of knowledge silo’s.

I am convinced though that trying to compete on “service” differentiation will be a significant challenge for professional services firms.  Not impossible by any means, especially in tight niches or with high net worth and more discerning clients, but it will be difficult with the general consumer population or for the holistic planner or adviser.

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The one area which seems to continually standout as an opportunity for human beings who provide professional services for their livelihood to excel in this fast-changing environment is to be great human beings that others want to be involved with.  Technical competency matters of course, as does having a business structure which can cater to the functional needs of the client – like handle their transactions and communicate with them continually.  But it is the individual human with all the faults, foibles, fun and familiarity that another human is attracted to sticking around with for a while.  Everything else in our world today is becoming pretty much disposable isn’t it?

Relationships are what gets held onto.

Maybe we should be selling relationships
 

I suspect that rather than focussing on trying to manage consumers expectations of how wonderful our future service will be, and why they should pay a premium for that, professionals will be better served by investing more time in developing tighter and better personal relationships with clients.  Becoming a person who is part of their tribe, their trusted circle, will be more valuable than written reports with pie charts delivered quarterly.

It is unlikely however that a client will pay you a hefty fee just to be their friend – especially not before they know whether they want you as one of their friends.  So charging a friendship fee in advance is not really where I am heading with this thinking.

However I have a few professional colleagues who are superb at keeping in touch with me, and it is very much a mix of social and professional – we enjoy each others company, although don’t live in each others life every weekend either.

But every 10-12 weeks we seem to catch up for a glass of something or a game of golf or a football game.  We know about each others families and interests, and we laugh at each other and talk about lots of things other than business.

I also happen to value them and their knowledge and I pay them fees for advice.  And I find myself doing it several times per year at least.

BECAUSE I know them well and like them and trust them, and BECAUSE they are part of my tribe, and BECAUSE they work at making sure we have developed relationships that extend beyond mere professional positioning, I give them business.  I am also mighty hard to shake away it must be said….they would have to do something wrong, rather than someone else promise to do something right, in order for me to move on from those professional relationships.

Actually, I don’t care whether they are “the best” in their field either if I am honest.  I care that they are very good at what they do.  I care that they understand me and how I work – and that they can fit in with that.  I care that they are fair with me.  But mostly, I care that they care, and I care that they “are there”.

Relationships matter a lot more than their service promise, and I don’t judge them or decide to retain their counsel on the basis of the firm’s customer service process.

Developing relationships to that level is far more promising than building a better service promise I suspect.

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