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Paul Lewis: Advisers need to sell their value and tell their price

Value and price are completely different. Advisers need to sell the first and tell the second.

Paul Lewis

I was walking across Westminster Bridge the other day, admiring, as I always do, Charles Barry’s fabulous 1840s Palace of Westminster, when I was struck by a flash of insight.

It happened as I passed by the Big Bus company rep who was selling sightseeing rides to a couple of tourists from Taiwan. He listed the places they would see, including Tower Bridge, St Paul’s and Buckingham Palace. There was a skilled guide to inform them about all the London highlights they passed, the open top deck would let them take advantage of the spring sunshine and there was even an option for discounted visits to some of the places on the route.

But best of all was the flexibility: it was hop on, hop off, so they could take their own time, re-boarding any Big Bus as often as they wanted all day, leaving time for lunch or even revisiting a favourite spot later.

An excellent pitch. And when the rep told the couple the price – £31.50 for a day, and yes that was each – they paid up.

He was explaining the value of his tour, and clearly separated that value from the price. Quite rightly, because they are two different things. And that flash of insight crystallised in my mind the difference between the two.

He was explaining the value of his tour, and clearly separated that value from the price. Quite rightly, because they are two different things.

The charges conundrum 

I had been struggling with it for the previous two hours. I was at the Money Marketing Interactive event at the old County Hall talking about the value of advice to a room packed full of financial advisers. On the panel were two excellent IFAs, Informed Choice’s Nick Bamford and Yellowtail’s Dennis Hall. Both stressed the value a good IFA added for their clients.

On displaying charges on their websites, Nick said he did, while Dennis did not. He had tried it but then received far fewer contacts from would-be clients so had taken them down.

I, of course, thought every adviser should display their charges.  It is only shops in Bond Street in the category “if you have to ask the price you cannot afford it” that do not. I do not believe that is true of advisers. After all, even they do not put diamond coronets as a potential investment return.

At the conference I was accosted (in a largely friendly way) from the audience and over coffee and biscuits later by those agreeing with Nick and Dennis. The real measure of an adviser’s worth was the value they added, not the price they charged. Some even said that mentioning anything so grubby as price might lead to clients choosing an adviser on the basis of price alone. That, I was told, would be a disaster. Presumably on the principle of you get what you pay for.

Others said you could not put a price on value. And because the two words are easy to confuse in English (for example, we talk about a valuable painting when we mean one which has a high price tag) the sense was that value and price were two sides of the same coin. If you talked about value and how much you added there was no need to talk about price.

The real measure of an adviser’s worth was the value they added, not the price they charged.

The value sales pitch

This muddled me. But Big Bus man made me realise it entirely misses the point. Value and price are completely different. There is nothing stopping advisers selling on both. “Here is the value I add and, by the way, I will charge you this.”

I know that advisers give clients an indication of what the cost will be at some stage. Not least, of course, because they have to. But when I say that advisers should disclose their prices clearly and upfront, as some do, I am not suggesting they should not add value. Or indeed sell their service on the basis of price.

Nowadays, thanks to the RDR, advisers do not earn commission from sales. That has liberated them from any suggestion that they are just there to sell a product. In fact, many at the conference – and on Twitter recently – have said firmly to me that they are not there to sell products at all.

They are there to take you where you want to go in life. Minimise risks and maximise potential. Help you understand the way money works. Of course, at some point, a product will probably be needed but only to achieve those life goals.

A poor reflection of advice: Major firms duck the issue on charges

Adding value to lives is, at least in part, what financial advice is about. One adviser gave an example of a couple who were travelling round Europe in an RV. They only realised they could afford to do that after a discussion with the adviser. Or what about the client who realised he could afford to retire earlier than he thought? Who told his boss to stick his job and left with a smile? Value added. Or handholding, as one called it.

Of course, explaining to people about money, helping plan their objectives and working towards meeting them is all fine stuff. And one reason why, since they were invented in 1988, I have been recommending that anyone who wanted to invest or had complex financial affairs should find a good independent financial adviser.

Good IFAs can add value. But to say you cannot put a price on value is simply nonsense. Your charges are the price of that value. On price alone, the Taiwanese couple would have paid £4.50 each with their contactless cards for a daily capped fare on a passing Transport for London bus, with (unadvertised) hop on, hop off. Cheaper.

But they happily paid seven times as much for the tourist value they wanted. So sell the value, and tell the price.

Paul Lewis is a freelance journalist and presenter of BBC Radio 4’s ‘Money Box’ programmeYou can follow him on Twitter @paullewismoney



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There are 29 comments at the moment, we would love to hear your opinion too.

  1. Ha ha Paul, and do you honestly think that the vast majority of Financial Advisers do not do this? What a waste of ink!

  2. What your highlighting Paul is the danger that the price is very easy to see (it’s a simple number), the value however is something else entirely, which is much more difficult to explain and in our world, depends entirely on that specific clients circumstances and what we are providing advice about.

    For me an example works really well. If a client looks at a number of different advisers websites because they want IHT Planning advice and see all prices (that are quoted) as “starting from £xxxx” they have absolutely no context to put this into.

    At this point it seems likely that first they will speak to the people who either do not quote a specific starting price, or those whose starting price is lowest.

    Which bears absolutely no bearing, or a potentially inverse bearing on the quality and value that firms advice might add. It’s all about psychology and why I would always recommend to the bosses of my company that they do not quote a price such as that up front until someone has ascertained roughly what value we may be able to add for a client.

  3. same old, same old drum Paul, give it a rest. Somebody wiser than me said, know the price of everything and the value of nothing. As Dennis has found putting the price out there leads to fewer enquiries, as most IFA’s offer a free initial meeting then give a price people are welcome to walk away, but at least they will hopefully know the value that they are walking away from.
    As regards the bus analogy, what you had was a good salesman selling a product with no comparisons, I am sure he did not say, give me £1 and I will tell you where you can get the same thing just down the road from XYZX at £28.50.
    Perhaps that is just a small part of what we do.

  4. The reason many advisers don’t put their charges on their websites is in large part to deter people like Paul Lewis from ringing them up: where the first question is whether they are open to haggling on their fees, and the second question is what level of returns the adviser can guarantee to deliver (because in their minds, using an IFA should be free money, and if they don’t get it, there’s always the FOS).

    Telling clients what you will charge them before you know what you are charging them for is like putting the price tag in the window without the goods attached. There are of course shops that actually do tell you what the price is before you know what you are buying – it’s called Poundland. And there’s nowt wrong with Poundland. But there is a middle ground between Poundland and Bond Street. “We have to know what you want before we tell you the price” is the middle ground between “All items 99p” and “If you have to ask you can’t afford it”.

  5. Thanks for the ‘advice’ but I’m OK…No, really I am!

    Here’s some for you.. Journalists need to learn to type with more than 2 fingers!

  6. We do tell clients the price – but not in the manner the FCA expects because they like you Paul are ignorant of how some IFAs work. We charge hourly rates and from those honest records know what advice costs. The same initial service costs us (and therefore the client) anything between x£s and 4x £s. i.e. a variation factor of 4? But if we say that the FCA get stroppy! Why? Because clients do not know what they need, what service is required until the sit down with us.
    There is a real risk Paul to consumers that by shopping around they will at best be misled by initial cost indications and at worst get limited advice which is wrong.
    The message must be always, but always sit down with an IFA first and then shop around.
    I repeat Paul, clients should be encouraged to shop around by taking advantage of free initial consultations to clarify what hey need. As a journalist, through your ignorance, you are failing consumers as are the FCA.

  7. Paul’s article sounded a bit like a children’s morality fairy tale. I even nodded off during it.
    Did you live happily ever after Paul?

  8. This is an excellent argument for not putting prices on adviser websites. If the Tour company simply advertised the price then they probably wouldn’t get any takers. Instead, they collar passers-by, explain the value and tell them the price. Why is that any different for advisers?

    You wouldn’t buy surgery on price (unless you think all surgeons are the same I suppose) so why buy your financial advice in that way?

  9. I too was at this shin dig at county hall, and listening contently from the back…and came to the conclusion, Paul’s argument really has no foundation, on one very simple fact… value never really materializes, that instant or even that day, week, month, year even; our “value” is not tangible… maybe “value” is the wrong word, I never say to my clients i will add value because I cant, yes their investments will go down as well as up and at the end of the day they may end up with more money that when they started; that to a large degree is in the lap of the gods I have no control over markets but I can guide and advise, hold-hands,in short my clients pay for service and having their best interests to heart it really is central to what i do (hey the FCA is actually right on this point)I run a business its fundamental to my success.
    I still see the client, (twice a year and regular contact on the phone and or e-mail) I saw in my very first week as an adviser nearly 27 years on, have I added value how do you measure value ? I don’t think you can in this business; but she has received excellent service, I have advised and held her hand through pensions, house purchases, two divorces, family deaths, savings and investments,tax issues, am I valued have I added value ? I recently calculated what I have charged her over the 27 years (as near as I could get it) …….. all I can say is …Bloody hell !

    The only thing I can say to prove my worth is…. she called me the other day and asked, I have been having sleepless nights just recently and need to ask you to put my mind at rest…fire away I replied, now please don’t get angry…was the response, what will I do if you die or god forbid retire !

    Is that value or is that just doing my bloody job, because believe you me the cost V value debate is irrelevant and eye watering, when you get a complement like this, and its purely down to service and having her needs and wants central to our working relationship.

    So Paul’s analogy of ” come on jump on my bus and we will show you this and this for the price of that” is so far removed from what we do (or what I do anyway)its at opposite poles.

    Paul also says -:
    “Nowadays, thanks to the RDR, advisers do not earn commission from sales”.

    I say-:
    Nowadays thanks to RDR advice is the preserve of the wealthy…..mainly all those people who have disposable assets built up by those commission hungry sales men of yester year !

  10. Chris De Luca 1st June 2017 at 3:43 pm

    Paul – the points and ethics lessons, regarding charges and the like, you wish to hand down to us might have more validity if you explicitly observed them yourself. What is your hourly rate and how much did you earn for this piece? How much do you get paid for each for each response you provoke? If I ever happen to attend a conference ‘graced’ by your presence, I shall really look forward to any ‘questions from the floor’ sessions as I suspect you are a ‘keyboard warrior’ without the character or capability to promote/defend many of your sentiments laid out in your MM and other articles.

    • You clearly haven’t attended a conference I have spoken at! I earn anything from 30p to £2 a word for what I write. If you want my tax return email me and I will send it.

      • From 30p to £2! That’s a little vague.. How are potential customers supposed to be able to get a clear indication from that?

        If I require an article to be written by you with 500 words in it, it may cost between £150 and £1,000 then?

        You’re making yourself look silly now!

      • So what you charge/earn depends on what you are doing and for who?

        Sounds familiar. Although I keep getting the impression you feel charges should be straightforward. How does anyone know if you are going to charge 30p a word or £2 a word. Do you have some sort of discussion with them first of all and then explain why you are charging £2 a word rather 30p? And why such a big discrepancy, surely you are doing the same job at either price?

  11. douglas baillie 1st June 2017 at 5:54 pm

    In my > 40 years as an adviser, I have rarely had any issues with fees. The exceptions only occurred when the prispective clients wanted to negotiate, and based on actual experience, I can confidently say that on both occasions, I wish I hadn’t , as these clients turned out to be a nightmare where price alone was their expectation, where value had no value at all in their minds.
    Today, I received a cold call from the daughter in law iof a long standing client of mine, who was full of my praises, who wants to see me about her forthcoming retirement, and didn’t once mention fees.
    Once I see her, and fully understand her needs and objectives, I will open the fee discussion, so that she doesn’t have to, and I will tell her what my advice is likely to cost. But only AFTER I have acquired a good understanding of her circumstances.
    This Paul, is the real word from which you are clearly and woefully unaware!

  12. Richard Wright 1st June 2017 at 10:28 pm

    Sorry but im not going to give the usual long reply because ive better things to do
    Lewis you talk absolute rubbish!!

    • douglas baillie 2nd June 2017 at 1:21 pm

      I agree with you Richard.

      By the way MM, isn’t it time that you found a more relevant and better informed commentator than Lewis who is increasingly out of touch and full of his own importance?

  13. I think some advisers are too harsh here. These comments don’t paint a very good picture of the IFA community. Without being rude it’s just a case of saying that it’s easy in principle to see how displaying a price is right but in practice you need to spend a little time with a client to try and the sell value first. Like the bus tour salesman, he sold the value first and then gave the price. It’s very hard to sell the value on a website before you know anything about a client, their needs and goals.

    • Tom, you are quite right and this is what Paul completely misses.

      Also what Paul has completely missed is that the bus tour salesman didn’t (and doesn’t have to) explain in great detail the commission he (or his company) receives from all the ‘discounted’ attractions the couple could see.

    • Tom, you are right, these comments, and many others like them show the worst side of the advice community. Hopefully you can take respite in the thought that these guys spend all day on here so cant have many clients.

      • The worst side of the advice community? If people who post an acerbic online response to an article specifically written to generate acerbic responses is our worst side, then we must be doing a very good job.

        I would have thought that our worst side was those who sold high risk unregulated investments, hopelessly artificial tax avoidance schemes and other scams, but clearly such things are trivial next to being rude to journalists.

      • And yet……

        Here you are Matt, doing exactly the same from a opposite corner !

        You dislike what some-one writes, or their personal views

        You make comment,

        A bit rich, do you not agree ?

  14. Can I suggest that your next article is a piece on the difference between knowledge and opinion?

    You can wax lyrical about knowledge being acquired through experience and/or education and, in the case of financial advice, is represented by qualifications. You can also point out that, in the case of financial advice, opinion is not necessarily based on fact or knowledge. You can then tell all your readers in which camp your articles sit. You should then always start your articles with a disclaimer that when it comes to financial advice you have no “knowledge” only an “opinion” and anyone bloke in the pub may have a more relevant one.

  15. “Here is the value I add and, by the way, I will charge you this.”

    Sounds great, but in reality disclosure needs to be given before the value is known.

  16. Many good advisers have been doing a great job of protecting peoples wealth, and building their wealth. Unfortunately with so many distractions of eg Law of Agency – where providers want to interfere – for many reasons all designed for more business and greater profits leading to “their” bigger bonuses. Lack of Corporate Governance – by product providers – and their desire to offload these issues onto Financial Advisers (as their Agent). Some less scroupulous advisers see the great commissions – as a means of Getting as much as they can “get away with”, this to include CFP’s and Chartered FP’s and other third parties. The idea of a commissions agreement which was broken before it started demonstrates – consumers cannot trust product providers – because they undermine the Rules EG Victims who complain are FCA checked and the product provider pays the “Fine ” to the Government via the FCA conduit. This advising lark is not just cracked – it is corrupt and no ne including reporters will deal with these issues. The BBC is prevented due to its reliance on money form the Government and newspapers are sponsored by their sponsors, – who have their own Bias E.G brand standard life and Andy Murray ( or as he may now be known “Aberdeen Andy”). It seems no one has the answer to removing Bias – unless monday box knows different?

  17. Steven Pearman 16th June 2017 at 3:37 pm

    I have booked to see Paul Lewis in stand up. I hope he is as funny in real life.

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