How do you put a value on the advice you give to clients?
Perhaps you have already carried out an exercise to define this. Or perhaps you were put off by the fact that some of it is so intangible that it may be too hard to quantify?
To help firms get to grips with articulating the value they offer, we've put together a white paper on this very subject - The Insiders’ Guide to the Value of Advice.
It provides a best practice overview, bringing together industry studies, views from over 200 advisers and case studies where firms share what they regard as the most valuable elements of their service.
It also provides a practical roadmap to define your value proposition, highlighting different advisers' processes for clearly communicating the value they bring to clients.
For those of you who’ve already defined the value you add, it provides an opportunity to compare notes with your peers.
If you've yet to complete (or start) this task, it will help you articulate your own value proposition – an exercise that will achieve three important aims:
1) It will enable you and your team to fully appreciate what you do and the impact it has on clients.
2) It will provide a way to demonstrate to clients that the value you add to their lives is far-reaching.
3) It will demonstrate to the regulator that you are protecting the best interests of your clients. While at present there's no formal requirement to do this, we know the FCA is increasing its focus on transparency, so it’s a good idea to get prepared.
From our discussions with advisers, it’s clear there are many ways to approach this.
However, there is consensus around the need to articulate the intangible.
Tangible aspects like rebalancing, tax planning or capital gains tax advice are straightforward to outline. But there are many other elements that provide real benefits to clients that should also be highlighted.
One of the advice firms we feature puts this very well: they define their value by using two different approaches - concepts and tangible numbers.
Frequently they combine the two, but certain clients will warm more to one approach or the other.
Taking time to record all the benefits you provide (we include a list of over 20 in the white paper) will provide a valuable resource for you to share with clients.
Adviser perceptions of value
To dig a bit more into what advisers think about value, we held a roundtable discussion and also a ran a wider adviser survey.
We asked advisers to pick then rank their top five attributes of the value of advice from a suggested list of 20. We also asked them to specify any skill or attribute they felt we had overlooked.
From the responses we received we discovered it was the softer, less tangible skills that scored the highest and made up the top three attributes:
- Empathy (76 per cent of respondents included this in their top five)
- Understanding a client’s life goals (49 per cent)
- Ability to simplify and peace of mind (joint third, at 47 per cent each)
Other elements that scored highly were:
- Building a personalised plan
- Consistency and continuity
- Behavioural coaching
Some elements scored less well:
- Advice on non-investment products
- Cost conscious
- Consider the whole family
- Helping with life events
What do clients say?
While the results provide some insights into what advisers believe clients value, a study by Morningstar indicates that clients may not always agree.
The study proposed 15 common attributes of advisers and asked both advisers and clients to rank them in perceived order of importance.
It revealed a sizable disconnect.
Clients undervalued behavioural coaching while advisers overvalued understanding the client’s unique needs.
Once you have articulated your own value proposition, it's worth running it past your clients to make sure it resonates with them. (There is a link within the white paper if you’d like help to set up a survey for your clients.)
Having insights from your clients will allow to make changes to your offering where necessary that hopefully in turn will lead to strengthened relationships and a greater understanding on both sides as to what the value of advice looks like.