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Articulate the value of your proposition


I thought Alan Lakey’s article last week was most informative. His experience of rejection by the client he described is, I suspect, not unusual. It certainly happened to us when we first moved to this basis of charging in 2004. To be honest, it still happens today but when it does we conclude that it was our fault for not properly articulating the value of our proposition.

However, I am not sure that the client is going to be compelled to buy advice if they are being told that the price, or methodology of payment, is determined by the FSA. What, I wonder, was the value proposition?

I suspect that if it starts off with a comparison between the way other advisers or salespeople charge (via commission) or indeed “the way we used to charge”, then the client is going to be fixated with price rather than value. Similarly, if the thrust of the proposition is about selection of product, they may well reject this approach.

Alan was going to charge them an explicit fee of £750 that he had diligently calculated based on his experience and frankly I do not think many of us would think he was overcharging. But it was only payable if they did not buy a product and I suspect that is the crux of the problem. Charge the client for the advice that is delivered, regardless of outcome.

If the advice fee is only payable if the client does not buy a financial product, then they will see it simply as a sales ploy. Why not charge them regardless of product solution or not? If we believe that advice is valuable and product selection is the minor part of the job (and most clients do believe this, in my experience), then surely it should be charged for.

Nick Bamford
Informed Choice


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