Defining value is easy, says Peter Bowman; the real challenge is to communicate, deliver and demonstrate it.
Structural change, increased consumerism, legislative change and competitive pressures are forcing financial planners and advisers to more clearly articulate and demonstrate the value that they provide to the market place.
A customer value model can provide decision makers with the ability to map the client experience they deliver against a desired client value.
Let’s take a closer look at each of the client values.
GOAL-BASED VALUE
This is the most obvious of all the client values. If a financial planner meets the client’s goals, they are going to be satisfied. How well do you meet your client’s goals? More importantly, how well do you demonstrate to your client that you’re meeting those goals?
Client goals can take all shapes and forms. Typically they will express in one of four ways.
Firstly, they might express a need to get clarity on their current position. This may include helping them make the most of what they have got; helping them budget to reduce waste and make better purchasing decisions; and helping them pay less tax.
Secondly, they might express their goal in terms of being better off financially. This could be around helping them achieve a lifestyle goal or helping them make a retirement goal a reality.
Thirdly, they might express their goal around financial stress – a goal to be more in control and less worried about money. This may include giving them clarity and direction, avoiding bad financial decisions and ensuring debt levels don’t get out of control. It might also include wealth protection outcomes, like insurance.
Fourthly, their goal might be expressed as a need for more time. This may involve being their personal financial controller, allowing them to focus on their career or the things they would prefer to be doing.
CONSEQUENCE-BASED VALUE
The financial planning process, by its nature, requires the client to participate in the process. This process may be transactional (a one-off need) or it may be part of an ongoing personal advice service. The challenge for advisers is to ensure that the client experience is a positive and relevant one.
Consequences of using an adviser and advice process might include: the client’s ability to set realistic and achievable goals, manage cash flow and pay the bills without stress; act with certainty and confidence; be informed and educated about money matters. Itmightalsoincludeproviding motivation and support as you both work towards their goals and have ongoing proactive advice as their life situation changes. Remember it’s not just about the destination; it’s also about the journey you take to get there.
ATTRIBUTE-BASED VALUE
Satisfaction results from the attributes of the adviser and their advice process. What an adviser does is something most advisers have struggled to define in terms of demonstrating value.
Attribute-based value might include the ability to work with an adviser who:
• is qualified and authorised/licensed to provide financial advice;
• is experienced in the provision of advice;
• has the ability to build meaingful and lasting relationships;
• can make sense of it for me, who will motivate and navigate;
• has access to a greater level of support, technical and research resources and solutions.
Attribute-based value might also be demonstrated by the advice process through:
• productive and time-efficient advice;
• a process that includes implementation;
• the provision of either transactional or ongoing services;
• the delivery of a personal outcome.
Defining value is easy, but what’s next? There are undoubtedly other factors that form a part of goal-based value, consequence-based value and attribute-based value. In some ways, defining value is easy. The challenge is really how to communicate, deliver and, most importantly, demonstrate value.
Financial advisers and planners who can identify, implement and articulate client value will be able to obtain a strategic advantage in the market place.
Peter Bowman is head of marketing for Financial Services Partners.
Customer Value Model
Client value
Satisfaction delivered
Goal-based value
Client goal-based satisfaction: based on meeting their objectives
Consequence-based value
Client consequence-based satisfaction: based on their participation in the advice process
Advice and adviser attribute-based value
Attribute-based satisfaction: based on the experience provided to the client through the advice process and the adviser.
Five tips for implementing value-based advice:
1. Articulate at review time how you meet client goals.
2. Manufacture an advice process that delivers positive consequences of participating in the advice to your client.
3. Build meaningful relationships and make your advice process easy to participate in.
4. Check that the value you think you are providing to clients actually is valued by them and delivered to them.
5. Find the mix of client values that set you apart from the rest, and build your reputation on them.
