This is the starting point and not, as sometimes erroneously claimed, “client segmentation”. You cannot segment unless and until you have designed and can articulate a powerful client-centric proposition.
In the new world, there is a clear distinction between advice and, as we call it implementation. Advice does not have to result in a product sale.
In the financial planning sector, advice might encompass “what-if” scenarios and lifetime cashflow forecasting. Such a service is valued and valuable. Clients are prepared to pay fees for such a service.
The challenge for the adviser is to be able to explain succinctly what the proposition is and for this to be meaningful to the client. Part of the proposition revolves around the key factors for success that all future advisers will have to demonstrate that supports their proposition – those of relevant experience, proper suitable qualifications, ability to deliver and competitive value charging. Miss out on any of those and the future will be very tough.
Clients are looking for a relationship. They do not want to be sold a product and never hear from their adviser again. They want reviews, particularly at a time like this.
It is dead easy to be an adviser when markets go up by 20 per cent, less easy when they have gone the other way and yet it is then that the client needs reassurance and good information flows.
Part of a powerful proposition, therefore, is a structured and relevant review process. This is supported by a valuation service, whether online or in hard-copy format. This is further supported by regular newsletters, again either in the form of an ezine or paper-based newsletter.
The important message this sends out is one of regular contact and not just because I want to sell you something.
Clients value face to face time with their adviser. They also value the availability of their adviser so phone and email contact add value.
Advisory services need to be described succinctly. It is useless to claim you can advise on every aspect of financial services, so specialism will become an important element.
The first step for the adviser is to determine what their proposition is by asking themselves what they are good at. What skills and knowledge can you combine together to claim expertise? Is this something that a person will be prepared to pay for?
Proposition, by the way, is not about some strapline, it is more meaningful. What clients really, really want is a description of the service they are going to get. Give them a route map and show them on a regular basis where they are on the client journey. Part of that journey may well involve the setting up of a financial product or two but that is just one tiny part of the relationship.
You will notice that proposition has nothing at this stage to do with price. It has everything to do with capability. Once you have a proposition based on what you are capable of doing, you will be able to move on to defining the clients that you are able to attract and look after.
This is the point at which segmentation may become possible in respect of existing clients. Do not fall into the trap of segmenting clients based on AUM because that is about segmenting the proposition based on cost of delivery. Some clients will happily pay more to get more.
The conclusion we have come to is that without a proposition that is powerful and purposeful, attracting and keeping clients will become very difficult.