Articulating Your Value as an Advisor Today

[Marie Swift]

I just returned from speaking at the fi360 national conference. The topic of my session: Articulating Your Value as a Fiduciary Advisor. The advisors in attendance were all Accredited Investment Fiduciary (AIF) and/or Accredited Investment Fiduciary Analyst (AIFA) designees. We had a very good interactive session with lots of audience participation. We all learned a lot in the process of sharing, so if you are an AIF/AIFA designee be sure to go to the designee portal and download the slides and the recording from that session.

My next speeches will be for Securities America and Pershing Advisor Solutions, the first part of June. So I'm doing some additional research on Redefining Your Value Proposition in Today's Market.

I'd like to get your thoughts and start a new thread of dialog here on the Financial-Planning.com discussion boards. Here are some questions to get us started:

1. Over the past 30 years, much of the financial planning process has been commoditized. Quantitative tasks can be done using online calculators or desktop software. Opinions and “expert advice” are freely available (perhaps too available) online through websites and media outlets. How does an advisor stand out in the midst of the noise, with everything from blogs to twitter to the nightly news competing for your clients’ attention?

2. We’ve seen an erosion of trust. How should advisors articulate their value to clients in the aftermath of the 2008/09 scandals?

3. What is “value”? How should an advisor define that, from their clients’ perspective?How has client perception of value changed over the past 2-3 years?

Looking forward to exploring this topic with you!

Marie Swift
Marketing Communications Coach
For FinancialPlanning.com

[Bob H]

The best statement I heard was a couple months ago...

"While the value of information is rapidly approaching zero; The value of real wisdom is approaching infinity."


That's what I offer to prospects/clients. Wisdom.




It hasn't changed much over the past 5 years. I do no marketing. All new clients come to us via referrals from current clients. The Trust factor comes thru the referral. Their friend/relative/co-worker trusts us. So they do to. If anything, the blow ups in the financial industry has made it easier to find new clients. They are no longer tied to that "big name" they see on TV and in ads. Now... they're seeing that same name in from of Congress.


Hope that helps.

Bob

[Marie Swift]

Brilliant! Thanks for sharing Bob H. Good points, all.

The best statement I heard was a couple months ago...

"While the value of information is rapidly approaching zero; The value of real wisdom is approaching infinity."


That's what I offer to prospects/clients. Wisdom.




It hasn't changed much over the past 5 years. I do no marketing. All new clients come to us via referrals from current clients. The Trust factor comes thru the referral. Their friend/relative/co-worker trusts us. So they do to. If anything, the blow ups in the financial industry has made it easier to find new clients. They are no longer tied to that "big name" they see on TV and in ads. Now... they're seeing that same name in from of Congress.


Hope that helps.

Bob

[Vig Oren]

Comments:


1) I would replace the word "Articulating" with Conveying or Expressing.



2) The more the advisers become jittery and sloganeering the more the clients become nervous and not trusting.



3) Advisers should continue as is and advance their knowledge. Experienced advisers for eye to eye consultation are hard to find these days at reasonable costs. Good experienced advisers are mostly lecturing, etc. The Garret Financial Planning chain seems to be the model for the future.


4) There is too much noise and spinning created by other "middlemen" in the media affecting the financial advisory folks. Take for example the recent announcement by Hewitt Assoc about the 15 times multiple of final wages as a proper saving amount required to retire on. The media was full of it without any explanation. Sort of a silly feeding frenzy by the non advisory spinners. We had a recent conversation about it here:


http://www.financial-planning.com/forums/viewtopic.php?f=236431&topic=2365769

[Bradly T.]

To Bob's point (wisdom & trust) and Vig's (experience/expertise), differentiation is best determined by an advisor's ability to provide wealth planning and issue consultation. The best of us address many forms of wealth risk and wealth management....most of the "competition" does NOT....even when they claim they do. While the fiduciary obligation is meaningful, it is not, in and of itself, EFFECTIVE. An IPS and superior portfolio construction project is only one small part (and hardly the first part) of true consulting, planning, and strategic response. Especially after recent events, clients respond to experience, insight, and "wisdom"; the greater the financial spectrum of that expertise, the more confidence the client has to engage and remain engaged.


Historically, the fiduciary had an automatic differentiator from brokers and agents. Now, upon their insistance that all financial professionals have the same obligation/standard, financial planning has moved to the top of the list of the "value" equation. Portfolios and their contents are a simple commodity now; this is the professional marketing cycle of the true wealth advisor/planners in the industry. Those of us who know how to contextualize all elements of financial risk and help clients respond to frequent and endless changes to client priorities, circumstances, and wealth management.



Those who are not planners, better become one, or hire one....only they can deliver the client experience most desired and are most effective at creating the value proposition you describe.

[Vig Oren]

Brad, one of my favorite explantion of the value conveyed by a good financial advisor is Larry Swedroe's who wrote this:


A good financial advisor can add value in many ways, including developing the right investment plan in the first place (making sure the investor does not take more risk than they have the ability, willingness or need to take), making sure assets are in the right location and making sure that the plan is implemented (adhered to).



Having a well-thought out plan is only a necessary condition for investment success. The sufficient condition is to have the discipline to adhere to that plan through the tough times (easy to stick to plan when things going well). That means disciplined rebalancing in the most cost and tax efficient manner as well as disciplined tax loss harvesting in the most cost and tax efficient manner. It also means integrating that well-thought-out investment plan into a well-thought-out estate, tax and risk management (all types of insurance) plan. And it means keeping up with the latest innovations in products and the latest academic research. A good advisor would likely run a Monte Carlo simulation to help you choose the right allocation.



As to fees, while the average fee might be 1% there are many that charge more and many that charge less. But price should only be one consideration. In other words, while good advice doesn’t have to be expensive, bad advice will almost always cost you dearly no matter how little you pay for it.



And each advisor offers different services. Some do all the financial planning while some only do investments. Some also offer the building of individual fixed income portfolios at no manager fee (providing the benefits of separate account management — providing tax efficiencies while avoiding the manager fee). And there are a wide variety of skill levels, as there is with any profession. I teach advisors all over the country how to be good advisors and I assure you that there are huge differences in both service levels and skill levels. So you have to be careful to do your due diligence.
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[Bradly T.]

There's an old saw that goes...."advice is worth what you pay for it, good advice is always worth more!"

[ConsumerAdvocate]

Without trivializing its importance clients are looking for someone who does what they say that they will do and does address the client's concerns. My clients look for strength of conviction coupled with a willingness to understand their own situations. This was evidenced in 08 and early 09 when portfolios were notched down a bit to reflect a more convservative risk tolerance. It would have been easy to whip out charts showing market rebounds but that would not have helped my clients cope then. Now, when a client does want to become more aggressive it is really easy to have the conversation that they shouldnt be chasing returns and perhaps their appetite for risk is less than they think. Cleints also look and appreciate an awareness of their own situations and are delighted to learn that not every solution requires a new investment or reallocation of capital.


People can get the data anywhere, but they look to the advisor for the personalized interpretation.

[Vig Oren]

I am wondering how would you sell your value to this DIY who is replying to "Insurance Guy" at the Bogleheads site in 2007 (he happened to be an MD who also wrote a chapter in the recent book "the Bogleheads Guide to Retirement Planning") :







We are mostly cheap-ass do-it-yourselfers who hate being ripped off. We have learned through sad experience that complicated is bad, that expensive is bad, and that there are many out there who have no qualms about legally transferring our money into their own accounts as quickly and easily as possible. We've been ripped off time and again by "financial planners", stock brokers, mutual fund salesmen, insurance salesmen, mortgage brokers, realtors etc etc etc. We have learned that you get what you DON'T pay for.



Feel free to stick around. Don't expect some of your ideas to be widely accepted here no matter how long you argue the point though. Very few of us feel anything but disdain for those who profit by selling products designed to be sold, not bought. By your own admission you sell cash-value life insurance, loaded mutual funds, and variable annuities. This puts you into the camp representing that which disgusts us most. Next you'll be talking about timing the market day-trading individual securities and how it is appropriate for most of your clients!



You emphasize that you never sell products inappropriately. Perhaps this is true. There are many doctors who believe that receiving gifts from the pharmaceutical industry doesn't change their behavior. There are good studies out there that show that it does. There are many commission-based financial advisors who believe that commissions don't affect their recommendations. I'm sure if we studied the behavior of large groups of financial product salesmen we would see that commissions do affect their judgement. I liken being an ethical financial product salesman working in that industry to a civilized man living among cannibals. Perhaps one could live among cannibals for years without ever eating human flesh, but it seems pretty tough to me.




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[Bradly T.]

It's hardly worth arguing with someone who believes cost = value and compensation = ethics!! Based on an MD's comp model, he'd be happiest with a high, recurring, and increasing fee to "align" his interests with an advisor's. But he will not have access to 80% of actual financial products which, when properly administered, would be recommended for the "treatment" of his chronic needs which include various forms of financial risk and excessive taxation. I love to work with nurses and K12 teachers, always have hated Dr.s and Phd.s - they are so much "smarter" than I am.


Of course, any true wealth manager and risk manager could illustrate dozens of applications for CV life, annuities, private placements, REITs, structured products, $500k-$1mm breakpoint funds that could deliver tremendous value to the good doctor for less "cost" than a fee only solution. But why bother and who cares?? Let him eat cake! I do find it interesting he's giving financial advice and if he's giving investment advice, pity the poor schmucks taking it. I don't get too many DIYers, do have some "self-directeds" but the last 10 years has taught them the "value" of professional help. I tell folks you can pull your own teeth too...... go ahead, try it!!



What the good doctor really needs is a Garret practitioner (or me) who will charge him 1% of networth (or income if higher) to provide planning and consulting only and get the ninny, over time, to call a good life agent, annuity rep, etc. for proper wealth management tools when education and confidence allow. I would never sell him anything; he's just a lawsuit looking for a place to happen!!

[Vig Oren]

Brad, I agree with your observation: "I love to work with nurses and K12 teachers, always have hated Dr.s and Phd.s - they are so much "smarter" than I am. "


I also like the "sure fire way to drastically increase clients' returns" in this reply by Insurance Guy:

"However, usually when we talk about investor behavior, we are referring to the fact that the typical investor will underperform the funds in which they invest. I've seen the Dalbar studies that will show that the average investor over a 20 year period received a return of 3.7% and the S&P returned 13.4%. (The methodology is flawed, but I think that the point is accurate that people underperform their funds.) Also, I know a sure fire way to drastically increase returns. I'll take a $100 investor and twist his arm to become a $200 investor. This doesn't increase his rate of return, but isn't the ROR rather meaningless in comparison to how much money a person has?

As an advisor, my value is not in fund picking. I bring much more value to the table via simple hand holding and arm twisting."
(This sentence is one of my favourites and I guess I know who is the smart one who wrote it.)

[Bradly T.]

Yes, this is the inherent flaw of the finest portfolios, plans, and fancy illustrations....our greatest talent must be aligned with all clients' greatest need - behaviour and response management. If you can't get clients to make decisions or act on decisions or persist in strategies or respond to changing circumstances, then you (me/we) are a failure. Your brilliance and your tools become moot!! The greatest problem I believe to the investment advisor and securities broker is the same - without comprehensive planning for taxes, debt, cash flow, risk, estate, benefits, etc., their functional value is very low. Their value is limited to portfolio performance or reduced by lack thereof but it IS the only measure available to the client to asses the "value" of the relationship. By engaging clients in consultation, education, strategic planning, progress monitoring and delivering concrete improvements in net worth, risk reduction, and wealth creation - the actual importance of relative portfolio performance is diminished. And, I would argue, should be.


If my competition could deliver a better performing and/or cheaper portfolio (and thereby better performing) but I help create wealth, protect wealth, and empower clients to act in their own best interests related to the prior listed issues - then, I am more valuable to the client. And it doesn't matter how I'm paid or how much I am paid, I delivered value. But most interestingly, I don't cost clients more and their portfolios do not do less well. If you don't provide comprehensive planning services, you are becoming increasingly marginalized. This is a great challenge to small shops, trust departments, bank brokerage, and wire houses who only offer it to the very wealthiest class. The indie BDs and many RIAs DO understand this and are very committed to planning and wealth management expertise and services for the median income working and professional classes.

[berto]

I think financial advisors are going to have to make two big changes to convince clients that they add value: 1) They have to explicitly adopt a fiduciary standard in working with clients, and explain what that means; and 2) Advisors must expand their education to include more tax expertise, including earning an E.A. designation in addition to a CFP.


For too long, 'financial advisors' have been trying to convince clients that they add value by 'beating the market.' This approach required primarily sales skills.



Now I think clients expect advisors to take a comprehensive approach which incorporates lower cost investments, integrates sound tax strategies (e.g. Roth conversions), and provides estate planning and insurance coverage without being gouged by commissions. This approach includes Social Security advice (e.g. when and how to do a 'reset' of SS benefits), financial education for their children, and a range of issues beyond what most advisors offer today.

[Marie Swift]

Hi Everyone,

Thanks for posting your thoughts on this topic. I've read them all and will be digesting over the next few weeks. I'm actually in Chicago right now attending/speaking at the NAPFA National Conference. Having lots of good conversations with journalists and NAPFA Members - including many Garrett Members and Sheryl Garrettherself - who are here dialoging about the future of the financial advice business.

Bob Veres, Sheryl Garrett, Gail Marks Jarvis and I, along with a few other NAPFA Conference Attendees, had a really good conversation today about scams and fraud in the industry, fiduciary standards and the need for financial planning practitioners to double their community outreach efforts.

Gail lamented that she hopes planners will find another way to communicate the value of working with a truely independent, caring, professional advisor who works soley in the best interests of his/her clients ... without having to use the word "fiduciary" over and over and over. Fiduciary is a big legal-sounding word and can be offputting if used too often in communications. Consumers want to hear simple terms from caring professionals with a sense of purpose. I heard this advice - be careful about using shortcut terms such as "fee-only" or "fiduciary" too often in your public and client communications - from mutlple sources at both the fi360 Conference and the NAPFA Conference.

My advice: repeat, rephrase, reframe the key points, saying the same thing in multiple ways with a clear sense of purpose and you will land on several phrases that are authentically yours. Those key phrases will bubble up and come to mind when you need them. It's also important to tell people WHY you do what you do. Telling people why puts you in touch with your sense of purpose and engages the emotional side of the listener's / reader's brain. It's important to write out and practice your key messaging points. Once internalized, you'll find it easy to connect with and engage with people. And, as one of the other discussion posts said, the majority of advisors should skip the cutesy glib phrases - it's tough to deliver them well and a phrase that's deemed "too cute" by the reader / listener can backfire rather than engage.

What are you saying to prospective clients now? How are you refining your message and staying your most-relevant best?

Marie Swift
Marketing Communications Coach
For FinancialPlanning.com

[Rich and Co.]

There are many dimensions to the topic of professionals and experts communicating to clients, their peers and the community in general.

All professional advice is geeting more specific, evidence-based, specialized, real-time and complex. Increased technology, velocity and complexity factor in as well.

A few observations:
- It would be interesting to move "wisdom" from a folk concept to actual expert, professsional intereactions, practices and knowledge
- Fortunately brain research and information processing research is getting very good so we now have increased understanding of concepts like trust in professional intereactions. We also know, for example, that there are significant gender differences in professional communications and interactions. This ties into the traditional concept of "segmentation" in marketing.

This work can get complex and technical so probably not appropriate for public discussion - like detailed medical advice. For example, it appears much of communications is unconscious; genetics, stress, vascular health, age, etc. effect behavior most significantly.

There is also new, good research on professional advice. communications and meetings but it is counter-intuitive and accepted wisdom. We study how doctors face some of these challenges for proprietary techniques to share with our clients. They work.

- A good phrase we have found effective with our clients is "Show more, tell less."

PS - Free advice worth what is paid for it...moralizing and tagging "other" professionals as "bad/wrong/stuipd or immoral" (name-calling), while it FEELS real good doing it, it an offputting and, let's be honest here, highly self-serving rhetorical tactic.

But that's the content of most online advisor discussions -- so have at it!

[LBA]

Bravo to Bob H! He is so on target, you really can not articulate your value as an Advisor, but rather must live your value as an Advisor. When I work with Advisors, it is never about telling their story, but giving them the tools to share their expertise and knowledge with their target audience so they see first hand the value of the work the Advisor can do.


Kind Regards,

Lana Burkhardt

Lana Burkhardt & Associates

Wealth Management Marketing

Hershey, PA

Stowe, VT

[Marie Swift]

I had the privilege of speaking with industry influential / visionary Bob Veres on May 15, 2010 about his new white paper report: The Future of The Financial Advisory Business.

The conversation is extremely relevant to Articulating Your Value as an Advisor today.
15 minutes of time well spent:
http://www.audioacrobat.com/sa/W1GKccST

Please listen to our conversation then post your comments here.

You might also want to download and read Bob's new white paper report:
The Future of the Financial Advisory Business.

Let's dialog about Bob's white paper and the related podcast interview.

Marie Swift
Marketing Communications Coach
For FinancialPlanning.com

[Marie Swift]

Lana makes a great point: We must live our values and demonstrate our expertise more than trying to tell people who we are and how we can help them.

It's really "show and tell" versus "just show" or "just tell".

It's important to have a clear and compelling value proposition, something you can say when asked "what do you do?" Just keep in mind that it's WHY you do what you do that makes for a compelling value proposition.

And remember that UVP stands for UNIQUE Value Proposition. How do you stand out as unique? Unique means one of a kind.

My latest article for Financial Planning magazine (July 2010 issue) talks in depth about articulating your value. Here's what Bob Veres said recapping the article in his Media Reviews service to Inside Information subscribers:

MEDIA REVIEWS - July 1-7, 2010

"What Have You Done for Me Lately?"
by Marie Swift
Financial Planning, July 2010
http://www.financial-planning.com/fp_is ... 446-1.html
Relevance: high

Marie Swift's feature article in this month's Financial Planning magazine talks about what we hope will be the final aftershock of the market meltdown: restoring client loyalty or watching clients whose confidence was shaken walk out the door. A number of commentators imply that your relationship standards with clients are at least one notch higher now than they were pre-crash, and that may be a permanent change. Another permanent change: one of the largest investment platforms in the dually-registered world has adopted a number of fiduciary-friendly features, suggesting that regardless of the SEC's actions, the fiduciary future may be upon us already.

The markets have thrown client relationships into jeopardy, and the new downturn may become the time when clients act on their restless instincts. Chip Roame suggests that a lot of financial planning clients have been underserved for a long time, but until recently they were unwilling to move. It is easier and more tempting than ever for clients to go it alone. Your mission going forward is to provide clear peace of mind in a world of volatility and uncertainty. Communicate in plain English, update constantly, and practice deep diversification. Sue Stevens, of Stevens Wealth Management in Deerfield, IL, is making everything as visual as possible.

Mark Tibergien says that the wrong way to build trust is to demand it directly. Instead, demonstrate your control processes, show how you protect clients, what service providers and custodians you work with and how they were selected, whose interests are being served and how you're compensated. He recommends a "Rights and Responsibilities Manifesto" which explains the expectations clients should have of you.

Blaine Aikin, of FI360, says that advisors need to move from being "avowed" fiduciaries to "functional" ones: having processes in place to demonstrate how you meet fiduciary standards, and eschewing commissions. George Kinder sees advisors deepening their relationships with clients and asking broad open-ended questions, and Tibergien talks about building an awareness of your value by listening. In the end, Sue Stephens returns to the idea of critical thinking; those advisors who can keep a clear head and think things through provide a value that clients will eventually recognize and appreciate. (p. 50)

Please read

http://www.financial-planning.com/fp_is ... 446-1.html
and let's continue the conversation here.

Marie Swift
Marketing Communications Coach
For FinancialPlanning.com

[Marie Swift]

Sheryl Garrett, founder of the Garrett Planning Network, Mary Lacey Gibson, a financial planner who also works as a business planning coach with fellow advisors, and I came up with a few tips on how to gather feedback from your clients so that you can build a strong value proposition.

Here, with a little reworking, is the gist of those conversations.

To get it right ... your value proposition, that is ... you need to know what your best qualities and, gulp, weak spots are. A good way to start the process of understanding the real value you bring is to speak with your clients directly. While surveys can be good, personal conversations oftentimes yield more candid and meaningful feedback.

How to Elicit Feedback from an Advisory Board

1. The Invitation Process

Determine your list and invite the right people. Review your client list. Select 8 to 12 clients that you feel you have a real solid relationship with. Give them a call. Tell them that you're forming a client advisory board and you really appreciate their friendship, respect their opinions and would love to get their feedback on how they feel you could best improve the quality of your clients' experiences with you.

Invite them all to meet with you together. If that’s not possible, visit with them individually in person or over the phone. In-person is best, as you will have a more rich and honest conversation that way. Tell them you will send an email (or mail) confirmation and a short list of questions in advance of the meeting. Ask them to come prepared to talk about the questions.

2. The Preparation Stage

Get them thinking between the invitational call and the feedback meeting. In an email or letter, recap the time, date, location and purpose of the meeting. Include a list of questions. Ask them to come prepared to talk about the questions.

Questions might include:

• If you were to describe me, and the work we've done together, to a beloved family member or friend what would you say?
• My business grows through referrals from satisfied clients. What would you suggest I do to increase the likelihood that clients will recommend me to their family and friends?
• When you were first searching for a financial advisor, what factors caused you to select me? What could have made that process better for you?
• What do you appreciate most about our relationship?
• Is there anything bothering you about our relationship?

3. The Client Feedback Meeting

Host the meeting. Pick a quiet, comfortable setting. Use a conference room or private meeting room and have breakfast, lunch or refreshments catered in. Minimize distractions.

Welcome people as they arrive and get everyone settled. Provide an opening statement about the purpose of the meeting. Ask people to be totally candid.

Ask your questions and take notes. Have a staff member or trusted business colleague take a duplicate set of notes (you may not be able to hear and capture everything on your own).

Thank the attendees and promise to use their advice.

4. The Thank You Letter

Send a thank you letter or email. Recap the top takeaways. Tell them you are in the process of incorporating their feedback into your business. Invite them to a Progress and Update Meeting in 60 days so that you can report in and get additional ideas on how to improve your service to them.

5. The Progress and Update Meeting

Repeat Steps 2-4 above, but instead of asking them the original questions, ask them to come prepared to offer additional insights and advice based on the key takeaways from the last meeting and the progress report you’ll provide.

In addition to a client advisory board, we also suggest a business advisory board. Find successful business owners, in particular, service businesses, in your community that you can learn from and share your ideas, gains and pains with.

These people, once they understand what you are trying to contribute to the health of the community, will become your referral sources and cheerleaders. All of them are serving the same small market and may have experiences that mirror yours.

You may be amazed how generous people are when they know you and like you and you ask for their help. We like to help people we care about. These clients won't expect anything in return for their candid feedback and wonderful ideas, other than seeing you take action and keep the channels of feedback flowing. Your clients want you to stay in business. They will help in any way they feel they can. Just ask.

Developing or Refining Your Positioning Statement

Now with the insights and key words you’ve gleaned from spending time with your Client Advisory Board and/or Business Advisory Board, you’re in great shape to refine what you say when you meet people in a business or social setting.

Take a few minutes to reflect on what you’ve learned. Use this What Do You Do? Conversation Starter and Positioning Statement worksheet to capture your thoughts.

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The person who posts the most compelling positioning statement between now and August 15th will receive a $500 gift certificate good for any service or group program offered by Impact Communications.

Click here to download a blank Positioning Statement Worksheet: http://dc153.4shared.com/download/323630317/8a650243/What_do_you_do_Conversation_S.pdf

[Marie Swift]

REMINDER

The person who posts the most compelling positioning statement between now and August 15th will receive a $500 gift certificate good for any service or group program offered by Impact Communications.

Click here to download a blank Positioning Statement Worksheet: http://dc153.4shared.com/download/323630317/8a650243/What_do_you_do_Conversation_S.pdf