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The 5 Things That Separate Modern Professionals From The Past


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There is no doubt that financial advisory practices are evolving rapidly into professional practices, with many already fully there.  There is also no doubt that a number of financial advisers and practices are struggling to evolve, and are firmly rooted in transactional, product-focussed, business models.

The more you compare the two – the modern professional financial advisory practice, and the historic product-focussed financial services brokerage business, it seems there are 5 distinct points of difference between the two.  These 5 differences suggest a way forward for those aspirational and career-focussed advisers who have not yet figured out how to make the business model transition.

The modern professional practice is different because:

  1. It separates product solutions from advice.
  2. It doesn’t link its value proposition to performance of a product or supplier or the markets.
  3. It leverages knowledge, systems & information
  4. It focuses on clients and market segments who value the advice component
  5. It accepts that with the modern consumer there is a slower & longer buying cycle; but it produces higher value clients for the practice

The separation of advice from product enables the advice component to be assessed on its own merit by customers.  It solidifies the professional relationship and establishes a clear focus on whose interests are paramount.  Product solutions may well follow the advice component, but they are secondary, and often considered by both parties – the practitioner and the customer – as tactics to help achieve the strategic objectives.  It is the strategic and objective advice which is valuable; the tactics of using particular product solutions at different times is a convenience  and a means to an end.

No advice professional really expects to be able to continually and repeatedly predict market performance or direction with any accuracy. Nor do they expect to be able to ensure that products perform as anticipated all the time.  Therefore it is foolish to create a value proposition in a customers mind that hinges upon market or product performance, which are areas beyond the advisers control or influence.  The value proposition for the modern professional is centred upon the life changes they can help facilitate for clients, and the achievement of client lifestyle goals.

Historically many advisers built businesses which had strong cashflows generated by repeated transactions, and those transactions relied upon an individual being able to convince people to “act now”.  The modern practitioner relies upon educating and informing customers so that they make good decisions, and recognise the “now” moments themselves, because they were predicted as part of achieving the plan. To support the raising of awareness and good decision-making by customers the modern practitioner invests in systems to ensure all customers are being continually engaged and informed, and has a commitment to providing relevant and practical information on an ongoing basis.

Everyone in society might buy any give thing at any given time.  To the transactionally-focussed advisers, anyone breathing and who has money is a prospect. To the advice professional, not all prospects in the marketplace are potentially good customers.  Whether it is because they are so self assured and capable of achieving their goals themselves, or whether it is because they lack aspiration and will not engage in anything which might change their lives, the fact is there are parts of society that simply place little to no value upon either changing their lives or getting help to do so. The professional has a clear picture of who they best help and who they best work with, and puts their effort into only dealing with those prospective customers.

The final point of separation is “patience”.  

Professionals are patient, and understand that good customers need to develop awareness and confidence, and be assured that the process really is focussed on them and their objectives.  That takes time to achieve; it can’t be done at a first meeting one evening.

I believe there will continue to be a place for the transactional business model for some time to come.  After all, there are a fair proportion of customers out there who have relatively simple needs, or who are convinced that they just need “product X” right now.  The non-fee charging broker model willing to execute that trade has a place and fulfils a need.  The revenue model underpinning that business structure is under attack from a number of quarters: the product manufacturers, regulators and the consumers themselves.  So while there will continue to be a need and a place for it, one has to assume that margins will get tighter and the business model will become tougher to pursue profitably over time.

The modern professional who is highly valued by the customer, and who will have a longer, deeper and ultimately more profitable relationship with, will be the one who focusses upon the 5 key things that separate them from the transactional brokers and customers.

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