Businesses often fall into the trap of trying to sell to as many people as possible by making their proposition “average” and, in the end, competing on price.
The problem with “the race to the bottom” (Seth Godin) is that you might win. And that’s not fun. But you might also come second and that’s really not fun.
Advisers have been bold in being prepared to say that their services are not for everyone. That makes sense: besides from the pure economics involved, it’s another definition of ‘everyone’ is ‘average’. And if you’re just the same then you’ve already lost.
Providers, at least when it comes to wider service and support, have been less effective in defining who they are for and focusing relentlessly on doing this well. There’s little doubt that price competition between providers has been a big contributory factor in the diminishment of adviser support services. But as pressure is felt across the value chain, and providers respond by cutting back, advisers are finding it harder to tell the difference between a slew of product – to be a tad reductionist.
This is a problem because while product suitability and price are clearly critical determinants of provider selection, they really are just the first check point on an increasingly less linear journey. What comes through loud and clear from the third wave of our adviser research, Profit Through Partnership, is that advisers recognise that suitability is far more nuanced than just the right contract (on paper) at the right price. Service and support play just as important a role – more so in some instances.
We asked advisers to think about the process they typically undertake when deciding which providers and platforms to use and to allocate 100 per cent across six factors. Price and rates are seen as the single biggest factor influencing decisions (25.25 per cent) while product suitability represents a further 19.08 per cent.
This leaves a significant amount of the decision influenced by service (31.11 per cent), including business processing and administration and the overall support package (17.05 per cent), which highlights the importance of getting this right.
With charges, fund ranges and core features converging, those who want to thrive will need to look beyond the immediate and obvious.
Why advisers say (or document) they recommended A over B from X over Y may be very different to the real reason they acted as they did, which our research demonstrates in some detail. With so little to choose between many products and providers, advisers need a reason, as well as a business case, to use you.
Phil Wickenden is managing director of So Here’s the Plan