The key to a successful transition to fee for advice is romance, according to a key industry consultant.
Presenting at the AFA’s ‘Future of Financial Advice’ masterclass in Sydney this week, Phuel Consulting’s Steve Pink said that the rules for romance are the same as those for building relationships, and ultimately that is the key to getting clients to value your advice.
The masterclass offered participants insights into how to have real conversations with clients about their needs and the value of the professional advice provided to address those needs.
Richard Klipin, CEO of the AFA, opened the session by calling on advisers to become more proactive about promoting their own profession.
“I think we’ve lost sight of the value that this profession delivers,” Mr Klipin said.
Sharing some of the findings from the AFA commissioned “Back to Basics” consumer research, Mr Klipin said the industry as a whole has been focused on delivering the technical, tactical elements of advice, instead of concentrating on the strategic value of what advisers do.
We’ve lost sight of how to be really good at the front end, of engaging clients
“We’ve lost sight of how to be really good at the front end, of engaging clients, because there are so many documents,” Mr Klipin said. He suggested that as an adviser, meeting a client for the first time, the provision of a Financial Services Guide upfront means the initial conversation is all about the adviser, when it should be all about the client.
Mr Klipin urged the audience to take a step back and focus on building a lasting, strategic relationship with their clients. According to Mr Klipin, this would ultimately more effectively position the advice process in an ‘opt in’ environment.
Securitor National Manager Practice and Advice Development, Jason Gaps, provided an overview of the approach his dealer group is taking towards transitioning advisers to fee for service.
Mr Gaps said there was no ‘one size fits all’ approach to transitioning a business. “It’s a diagnose before you propose approach,” he said, adding:
“We don’t need to pull apart your value proposition, your pricing and your segmentation if it’s well progressed. It might be a matter of tweaking at the edges to ensure your business is well positioned to progress.”
Launched at the masterclass, Securitor’s transition to fee for service package for advice practices includes a tailored transition program that incorporates business model refinement, identifying their practice’s client value proposition and pricing their advice. The implementation process is supported by key dealer group staff, who are in place to keep the plan on track and hold the adviser accountable.
In a fast tracked relationship building workshop, Mr Pink said the key to creating a pricing model for advice clients was first building a relationship with them. That way, Mr Pink said, the client is ultimately buying trust.
Mr Pink said that when a client is buying something they don’t necessarily understand, then proof is exceptionally important: “[As a client] I don’t necessarily want to know all the detail about how this idea works, but I am interested in why it works,” he said.
Mr Pink explained that if the benefits of the advice have been articulated in a way that makes sense to the client then the adviser can more easily position the fee for that advice.
After masterclass sessions in Sydney and Melbourne this week, the final ‘Future of Financial Advice’ masterclass will be held in Brisbane next week on Tuesday 21 September.
