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Anxiety syndrome

Gain the attention of clients by explaining the problems they may face and then take a proactive approach


The Seth Godin blog made a fantastically simple but completely true point recently: “Clients do not wake up desperate for a solution to a problem they don’t know about. The problem needs to be sold to them and, as part of the communication, the client will be more likely to become engaged if you give them an idea there is a solution.”

It reminded me that launching into a description of the features and benefits of what you have to offer – even to your key clients – is unlikely to consistently deliver the results you desire. If a proactivity exercise is to be successful, it is essential first to engage the person you are communicating with.

And one of the most effective ways to do this is to create (justifiable) anxiety. If a client demands a particular product or service, then serving this need should not be difficult but most clients do not when it comes to financial services.

This means that proactivity is essential. In other words, not relying on merely responding to the demands of clients in order to grow your business. Explaining and articulating what problems may be encountered by an individual or business is an essential facet of encouraging clients to take action with their adviser. And when it comes to subjects to be proactive about in relation to financial services and financial advice, there is rarely a shortage. The present time is no exception.

Explaining and articulating what problems may be encountered by an individualor business is an essential facet of encouraging clients to take action with their adviser

As I have said in past articles, the tax changes we are experiencing are significant and will affect many advisers’ clients. The recent publication of the tax gap by HM Revenue & Customs provides more evidence (as if it were needed given the continuing and pressing need to reduce borrowing) that tax pressure will continue to be applied by the Government – along with more spending cuts.

The tax gap appears to have increased by 10 per cent to £42bn in 2008-09. Unsurprisingly, the biggest gap is in relation to VAT (16 per cent of expected revenues unpaid). That may not be good news for those hoping for some kind of amelioration in regard to revenues from adviser-charging (see my last three articles for my thoughts on this).

A Treasury statement reads: “The tax gap number is staggering and this Government is committed to taking the necessary action to bring it down by taking steps to reduce tax avoidance and evasion, including by the richest people in our society, so that everyone pays their fair share and we reduce the tax gap over the coming years.”

And, once again, we see that officialdom cannot resist the rhetoric value of including a reference to “the rich”. This plays well, of course, to the populist press.

However, it does provide further evidence that a key segment of the client base of many advisers (“the rich”) can look forward to a prolonged period of “tax austerity”. And in such a period, informed advice is essential.

To assume that all of your clients are fully tax-planned in relation to minimising income tax, capital gains tax and inheritance tax would be a big (business-losing) mistake – as it would be, for example, to assume that all Isa-investing clients will make investments off their own bat up to the new £10,200 annual limit.

As for pensions, there is so much press over these changes that most higher-rate taxpayers will at least need some guidance and those likely to be affected will need serious advice over action and possible alternatives as the picture becomes clearer.

For this tax year, there are also the anti-forestalling measures to deal with and the resulting opportunities to contribute within permitted maximums and still obtain higher-rate tax relief/avoid charges, especially where this amount is in excess of what could be paid and relieved when the new provisions come into force.

Engaging with relevant clients on the basis of explaining the potential problems these changes and the continuing tax pressure could deliver, in a way that creates all important (justifiable) anxiety, is the critical first step in the pro-activity campaigns related to tax and pension changes that are touched upon above. In other words, start by selling the problem.


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