In the brave new world of financial planning, a compelling customer value proposition (CVP) is the thing that is most likely to convince a client to pay a fair price for a financial planner’s services. We hear a lot said about CVPs – and now I know why.
I had an arthroscopic rotator cuff repair – a shoulder reconstruction – recently, following an injury sustained in a spectacular incident while playing in goal for my soccer team. (Yes, I saved the goal.) This is not a pitch for your sympathy, if you’ll pardon the pun (but cartons of recuperative beer would not be turned away). It is an insight into the value proposition of a real professional: an orthopaedic surgeon.
Nine-and-a-half weeks after the initial injury, and after six weeks of ultimately futile physiotherapy, I finally visited my GP who referred me quite quickly to have an ultrasound. One thing led to another – x-rays, MRIs – and I soon found myself facing the surgeon: Greggory Burrow, at the North Sydney Orthopaedic and Sports Medicine Centre. Gregg explained in some detail just what damage I had sustained, and how he could fix it.
Almost the entire conversation was focused on what he was going to do, why he had to do it, and how it would help. It was all about me: the benefit of having the operation; the benefit it would bring to me; what I would be able to do afterwards that I can’t do now. (“Will I be able to play golf afterwards?” “Yes, no worries.” “That’s great – because I couldn’t play it before.”)
I asked him about his qualifications and experience; he had the good grace not to be insulted. He’s put back together a range of athletes far more finely tuned than I. I asked him about the mechanics of the procedure; he demonstrated with the kind of glee that only orthopaedic surgeons (and perhaps carpenters) can muster about such things. I asked him about the risks, and he gave me more than enough material to read and digest. And when I did think to ask about the cost, I was told, in effect, that he was expensive, because he was good. And that was it.
I received correspondence from Gregg before the operation, which, among other things, disclosed his fee. I was surprised to have almost no reaction to the figure. It wasn’t a fortune, but it wasn’t insignificant either. I was so focused on what I was going to get out of this procedure that the cost seemed irrelevant compared to my perception of the value.
Next time I saw Gregg, I was prepped and ready for surgery. I knew what he was going to do (even if I did not understand how); and I knew what the results were expected to be. Two days later I was back home, a bit sore and bruised, but on the mend and, disappointingly, with only five little incisions to show for it all. The surgery has been successful; for the most part it has been surprisingly pain free; and if I stick to the physio program, all will be well. Gregg has fulfilled his value proposition, and then some. And he was well paid for it.
I’ve had some time to think about how he handled this aspect of his work. Rod Bertino, principal and founder of Business Health, covered this issue at a Professional PlannerHUB meeting in Sydney on June 27. Rod says that you can’t win any conversation with a client (or a patient) that focuses on cost, because there’s always someone who will do it more cheaply. You will lose.
Paul Barrett, head of wealth at ANZ, has urged all planners to very carefully develop and refine their CVP in readiness for a post-FoFA world. Despite the odd disparaging comment in response (“Here we go yet again, some head of ‘whom-ever’ telling us the obvious…”), it really cannot be said too often: Focus on value, not on cost.
If the first discussion I’d had with my surgeon had been about the cost, there’s a very good chance I’d have at least thought about shopping around or at least haggled. And that would have been a big mistake on my part.
To give you a better idea of what can be achieved with a focus on value rather than on cost, consider this. The Medicare scheduled fee for this procedure is just over $900 – kind of the “lowest common denominator” cost, if you like. There’s probably someone, somewhere out there who would do it for $900, if it had occurred to me to look for them. But it didn’t. Gregg’s bill was more than double the scheduled fee, and I reckon he was worth every cent.
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A key component of a strong and trusted profession is a rock solid professional association. You cannot have one without the other.
If a professional association is weak, or it’s not trusted and respected by the public, and it’s regarded as irrelevant by regulators and Government, then it’s worse than useless; it’s actually counterproductive.
In addition to this month’s cover story, on the importance of having a strong professional association (page 12), I asked two undisputed professionals, Bill Buttler from Rice Warner Actuaries, and Robert MC Brown, to describe in their own words what being a “professional” actually means to them. Both are highly-respected members of their respective professions; and until you get a true sense of what it feels like, how it affects your thinking and behaviour, and the duty you owe to your profession, then you can’t really grasp what the transition to professionalism really means. Bill and Robert give their views, starting on pages 20 and 22, respectively.
