As a financial advisor, you know you bring value to your advisory relationships, which, in your mind, justifies the fees you charge. Your challenge is that, from your clients’ perspective, value is difficult to define. It doesn’t make it any easier when you consider that a client’s assessment of value is subjective, which can vary from client to client. A study by Vanguard attempted to quantify an advisor’s value in terms of how the right advice—primarily keeping clients from abandoning their strategy—can potentially increase a client’s returns by as much as 3% annually. The problem is that difference in performance isn’t apparent in your clients’ statements.
So, how do you demonstrate value in a way that makes your clients not feel the need to question why they’re paying the fees you charge—that they are getting their money’s worth? It may be as easy as simply giving your clients what they want.
What do clients want?
#1. Personalized advice
You could start by ensuring each of your clients receives highly personalized advice and service. According to a survey by SEI and the Financial Planning Association, 63% of high-net-worth investors highly value an advisor who personalizes advice. In that survey, personalized advice ranked second behind trust in terms of what clients are looking for in an advisory relationship. You might be thinking, “Well, I do personalize advice with an individual financial plan for each of my clients.” While that may be true, the only thing that matters is your clients’ perception of value.
It’s essential to take personalized advice to the next level by engaging with them on a personal level at every turn. Send them emails with content tailored to their needs and interests. Send a card commemorating special family events—i.e., a child’s graduation, a wedding anniversary, etc. Call just to check in and see how the family is doing. The more you engage your clients, the more you show you care and the more value they receive.
#2. Specialized expertise
The most successful advisors got that way by narrowing their focus and specializing in a niche requiring a level of expertise not found with most advisors. The deeper the niche, the more specialized expertise is needed to be of value. At that level, an advisor’s specialized knowledge is appreciated because it is unique to the needs and concerns of clients in that niche. Be sure to create content for emails, your website, or a blog that’s specific to that niche.
For example, if you talk to thoracic surgeons and engage with them about their circumstances, your advice will have more value. That’s when you gain notoriety as an expert in your niche, making it easier for your clients to have conversations with their colleagues about how much value you bring.
#3. An investment coach
Many clients don’t realize it, but what they really want is an investment coach. In any other endeavor requiring people to achieve a level of performance beyond their current capacity, people often seek out a coach. They do it in sports, business, and fitness training because they know how difficult it is to improve performance without a coach. They need a coach to guide them and hold them accountable and keep them on track to their goals.
It’s no different in investing. For advisors, developing financial plans and investment strategies is the easy part of the job. The hard part is dealing with clients who go rogue and want to break from the strategy. That’s where financial advisors begin to earn their fees.
Just like personal trainers, investment coaches educate their clients on certain indisputable principles. For fitness trainers, it’s the law of kinetics. For advisors, it’s the laws of investing. It’s your job to educate your clients on how those laws create the framework of a sound investment strategy. Your biggest challenge is keeping them laser-focused on their strategy in the face of unexpected events. As with any coach, you must hold them accountable for their decisions and help them avoid costly behavioral mistakes. That is why people pay personal trainers or executive coaches, and that’s why your clients pay you.
You need to accentuate your value.
Regardless of how much they’re paying in fees, all clients have come to expect 5-star service from their advisors. But, by providing personalized advice, specialized expertise, or investment coaching, you are differentiating yourself, which is critical in a predominately commoditized industry. It’s essential to use that differentiation to your benefit by accentuating the value it brings so they will never question your fees.
Here area few ways you can accentuate your value:
#1. Ask for feedback.
You should ask your clients if the advice or service you provided hit the mark—whether it addressed their specific needs or concerns. Help them understand how it was personalized for their circumstances.
#2. Build authority.
The more authority you can build in a specialized niche, the more visibility you have. Use that authority to remind your clients how your expertise is unique among financial advisors and how they, being your clients, benefit from it.
When establishing a relationship with a client, explain the real value you bring as an investment coach—to guide them, hold them accountable to their strategy, keep them focused on their goals, and help them avoid costly mistakes. Then explain what that means in terms of them being able to achieve their goals.