I know many advisers weary of answering for markets, returns and events completely outside of their control. I know many tired of the same old conversations about money and yearly reviews. How did this come about? It is The Industry’s fault.
In the old days, in the world of commission, smoke and mirrors, when clients did not realise how much they were paying for advice, it was okay to be part of The Industry. Product providers used their slick marketing, aided by big budgets and overpaid sales reps, to encourage advisers to sell as much of their stuff as possible. And it worked. Advisers got away with it. But they got away with it for one reason only: The Industry was paying them.
It was okay to have a product or investment-focused service if clients thought it was free. It was okay to be seen as part of The Industry.
Advisers helped The Industry get what it wanted: distribution. It worked like magic. The Industry got its stuff sold, advisers earned their commission and consumers got “free” advice.
No wonder so many advisers have ended up with a product or investment focused service. No wonder so many now have to spend so much time validating allocations, charges and returns. This creates a never-ending dynamic where advisers must constantly justify how they are doing on a relative basis – a game no one can win in the end.
But here is the thing: since RDR, The Industry is not paying advisers any more. Clients are. And they are now becoming more and more aware of their increasingly explicit fees. This changes everything.
When did you last hear a doctor refer to “our industry”? Advisers need to step away from this. We need to demonstrate that we are part of a profession and that our service revolves around one thing: clients and helping them get what they want – which is not financial products.
I am honoured to be asked to write for this publication. They have said I can shoot from the hip, so let’s put that to the test.
We have to be careful how we communicate our service, not just to clients but to ourselves. Take the title Money Marketing, for example. The thing is, we are no longer in the business of marketing money. We are no longer paid for marketing money.
Wake up and smell the coffee
We are in the business of changing clients lives, of helping them get the life they want without running out of money – or dying with too much. That has nothing to do with marketing money or selling financial products on behalf of The Industry. Providing a service proposition that focuses too much on the money is a recipe for disaster.
The value advisers provide is not from advising on financial products, implementing investments or reviewing and rebalancing thereof. Yes, that needs to be done. But that is not where your value is. If this is what you are charging your fees for, it is time to wake up and smell the coffee.
Our true value is that which a computer algorithm could never provide; value that is uniquely human. As my friend and business partner Mitch Anthony says, the central question we should be asking clients is: “Are you using your money in a way that is improving your life?”
This question places the emphasis where it belongs – on behaviours that produce results. Change the central question you are attempting to answer, and the perception of your value will change with it.
Our profession has made several transformations over the past few decades. But it is about to make the biggest of all time.
Prodded by the millennial generation, we are seeing a strong movement towards redefining money. Instead of accumulating money for the goodies it can buy, people are starting to use money to live the best life possible with what they have.
There is a revolution in the air. It is time to move from a “return on investment” approach to a “return on life” approach.
The great promise of the return on life approach is not just what it can deliver into the client’s life but also what it can deliver into the adviser’s life: integrity, congruency, belief in what you stand for.
Advisers’ real purpose: not to sell and distribute products on behalf of The Industry, but to help clients get and keep the life they want
So if you are weary of answering for markets, returns and events completely outside your control, it does not have to be this way. We just have to take the focus off the money and put it where it belongs – on clients and what they really want. This is a service worth paying for.
The difference between an evolution and a revolution is this: if an evolution is taking place, it is just a matter of time. If a revolution is coming to pass, it is because some people have foreseen the eventuality and have decided to hasten the pace in that ultimate direction.
I am pleased to say that an increasing number of advisers in the UK are now breaking the shackles of The Industry and seeing their real purpose: not to sell and distribute products on behalf of The Industry, but to help clients get and keep the life they want. The direction is set and the old way of providing advice is dying a quick death. The client requires more; the profession needs to deliver more. Roll on the revolution.
Paul Armson is the author of “The 7 Habits of Highly Successful Financial Planners” and the founder of Inspiring Advisers