June 19, 2017
Risk specialist adviser and consultant, Chris Unwin, has put forward a strategy that he says can form the basis for a business model under which risk-focussed advisers can charge fees for their advice solutions.
Operating under his view that “…commission-based remuneration for risk advice is on its way out,” and that fee based remuneration is just around the corner, Unwin says he has found that many risk advisers are struggling with the concept of charging a fee for risk advice:
“More often than not, this will be because the value that a risk adviser represents to their client is not as tangible as the value that an investment adviser represents,” said Unwin, who added that the monetary value of ‘peace of mind’ is not as tangible as that of investment returns and the gradual achievement of specified financial goals.
Unwin also believes the public perception is that “…the only monetary or quantifiable value in risk advice is in the event of claim – which ironically is the one situation that the client hopes will not happen!”
Based on his premise that risk-focussed advisers will need to find a way to charge fees for their advice in future, Unwin advocates a three-step process to achieve this outcome:
Step 1: Appreciate the value you are already delivering to your clients in the risk advice process
Step 2: Add more value to your risk advice process – both initial and ongoing
Step 3: Communicate that value more effectively
…the large majority of the problems around the value associated with risk advice are in the adviser’s head
In relation to the first step, Unwin says he believes that the large majority of the problems around the value associated with risk advice are in the adviser’s head; not their client’s: “You are almost certainly already giving value,” says Unwin, “…therefore any changes needed will be in your mindset; not your process.”
Unwin sees no reason why the professional advice delivered by a risk adviser should be viewed any differently than advice provided by other professionals: “…clients are perfectly happy to pay a fair price for quality service and advice,” says Unwin, who challenges risk advisers to reflect on the professional services they themselves receive: “Ask yourself: who are you a client of? Whose fees are you paying on a regular basis and why are you happy to pay those fees?”
He continues: “Also ask yourself: why do you go back to a favourite restaurant again and again? Is it just the food? No, of course not – it’s also the service, the ambience, the pricing – it’s the whole experience.”
Unwin says he believes there are numerous ways in which advisers can take the second step of adding more value to their risk advice process, and that the answers to adding more value to the process will vary depending on the adviser and the nature of their business.
In terms of the third step of communicating your value, Unwin says it is crucial to understand that value is not specified like a ‘tick in the box’ scenario – it is perceived. Unwin: “…that is to say it is an awareness on the part of the client that comes with enjoying a quality experience rather than just experiencing a transaction.”
Chris Unwin is running a series of Risk Workshops in all five major capitals in July/August, during which he will focus to a large extent on Step 2 of his three-stage process for charging a fee for risk advice, ie how to add more value.