How Not To Engage Clients

Is values-based advice the right approach?

Some time ago, on an overseas trip, I got involved in a discussion about the role values play in getting clients to engage with advice and why I believe it wasn’t the right approach.

I remember it well because, oddly, it soon became quite heated, the sensitivity to the topic coming as a shock.

I also recall that as I listened to the argument rain back with increased ferocity, one value of my own kept screaming at me from the back of my mind.

“Don’t promise an outcome you can’t reasonably be expected to provide”

Before we start

Let me preface by saying that if there are two ways you can take this article, and one of them is as a personal attack, please come to the conclusion I mean the other way.

I have worked with advisers, some of whom I consider friends, who believe in the values-based approach. I also believe (and may have told most of them) that they are good enough advisers to be able to demonstrate their value without this.

I am not wedded to this view though. I am open to the possibility I am misinformed in some way. If I am later introduced to information that shows this to be the case, I will admit my ignorance. As my favourite bumper sticker reminds me, “Don’t Believe Everything You Think”.

As it stands though, this is why I believe what I do. Feel free to disagree (but please don’t shout).

The start of the overreach

When started at MLC back in 2001, the flavour of the moment when it came to financial advice – or more specifically the method of demonstrating the value of advice to new prospects – was lifestyle financial planning.

It was essentially a form of what would now be called objectives-based advice, or goal-centric advice, with one distinct difference; it went further than just making specific goals the centre of the discussion, to making a specific state of living that objective:

  • I want to work less.
  • I want to travel more.
  • I want to enjoy my work more.
  • I want to provide for my family.
  • I want to have better relationships.
  • I want to leave a legacy.

The problem with this approach was that although it created a wonderful discussion, at the end of the day the advisers, who had predominantly been investment or product-centric up to that point, were left with one big question once the meeting had ended.

How do I deliver this?

Marketing & outcomes

Marketing as a vocation is a vast and diverse body of knowledge.

There are so many different aspects to it that sometimes I feel that each should be dealt with as individual “sciences” – linked but ultimately very different in nature.

Tucked in behind marketing is ‘sales’, itself utterly different and, much like the various sciences, focused on similar outcomes.

The focus of marketing and sales is turning complete strangers into buyers, customers or clients.

There are so many ways to slice and dice one approach from another, and let me draw one such line between two distinctions.

  • Marketing & sales that promises deliverable outcomes, and
  • Marketing & sales that promises mostly undeliverable outcomes.

In what I do as a business coach, there are certain promises I can make and be reasonably clear about the probable outcome.

I know that a firm I begin working with whose total revenue per adviser is under $400k will, as long as they implement what we agree needs to happen, generate at least a six-figure uplift in revenue within the first 12 months without any increase to expenses or capacity.

I know that a firm that comes to me with issues converting prospects to new clients, given the right starting point, can remove all fee sensitivity from the first meeting, lift conversion rates to 80$%+ and get a decision to engage within 2 days of the meeting without any pre-preparation or factfinding before the meeting and without need for any proposal.

I know that by implementing a client experience map, a practice I work with generate at the very least double the number of client referrals within 12 months, get 70% of clients engaging with the Review process at the first contact (including returning all pre-work ahead of time) and enjoy 98%+ retention rates, even if they are also increasing fees annually.

I can make these promises because:

  1. There is a process and method behind each project that has been repeated many times over, which creates the transformation,
  2. I’m clear on what is needed from the firm, both in terms of situation and action, as a starting point (aka the before)
  3. I am aware that failure to get the result in the timeframe – 12 months, usually – is highly detrimental to my client, our relationship, and ultimately my reputation.

Does that mean every client achieves the outcome?

If they implement what we agree needs to happen, yes.

The caveat exists because I am also aware that there are factors here that are outside my control.

These are things I am very clear about, and why I am comfortable making those statements – it’s the line between knowing what I can do, and what I don’t.

The Expectation Gap

The key point is about expectation.

The goals-based approach – which if done well isn’t ever primarily about financial goals (because most people’s goals aren’t primarily financial) – is about three things.

  1. Getting clear agreement of the desired outcome to the level that it can be defined and becomes measurable.
  2. Working backwards from there to understand the starting position in relevant terms.
  3. Identifying what actions can be taken based on what I know to work to bridge the gap within the desired (or agreed) timeframe.

If I can’t bridge the gap, I am (and should be) open and honest about it and share what I think is possible, reasonable and likely.

My problem with the values-based approach is that it seems to fool itself into missing this part of the puzzle.

Values as outcomes

Values aren’t goals. I think we can all agree on that.

Goals can be ticked off life’s bucket list. Values cannot (but they can change).

According to the dictionary definition, values are:

1. The regard that something is held to deserve; the importance, worth, or usefulness of something.

2. Principles or standards of behaviour; one’s judgement of what is important in life.

In other words, an expression of what matters to an individual.

This is where the water gets murky because whilst money may and can help clients live a life that is more aligned with their values, it’s no more of a guarantee that paying for a gym membership will result in me becoming the healthy version of myself I am drawn to become.

That requires me to take action. The gym can’t do my push-ups for me.

Let me break it down into two key questions,

Can I, as an adviser/ coach, help my clients get clear on what is important?

Clearly, the answer here is ‘yes’

Just last week I helped a practice owner realise that the answer to their profit, capacity and resourcing issue might not be attracting 20 new clients @$3,000 each to add to the 100 at @$3,500 they already couldn’t manage.

Did that change what they did next?

Sadly, no but that’s not a complete outlier. Not all advice will be taken, no matter how clearly you make the goal or the understanding of the problem.

Helping clients see the trees in the woods is a huge part of the value we create, but that doesn’t guarantee action.

Can I, as an adviser/ coach, help clients change their behaviours to help them achieve more of what’s important?

Again, yes, but it raises a bunch more questions.

Is this really what financial advisers are trained, equipped and qualified to be able to do?

At what point does advice end and counselling start?

If counsellors started providing (unlicensed) financial advice as part of their treatment, would we be willing to accept that?

At what point is a line crossed?

The issue with values as value

Let’s say my client drops those very same values on the table during our initial meeting.

  • My faith is important to me.
  • I want to be there for my family.
  • I want to spend time with friends who share my values.
  • I want to stay fit and healthy.
  • I want to indulge my passion for travel.
  • I want to live a life of constant growth and learning.
  • I want to achieve self-actualisation.

How much of that, as financial advisers, can be genuinely controlled?

Not influenced. Controlled.

As in something you can deliver to a client in return for their investment in advice.

  • My faith is important to me – no.
  • I want to be there for my family – you may be able to provide the resources to do certain things differently, but you can’t facilitate the outcome.
  • I want to spend time with friends who share my values – again, create the resources, yes. Facilitate the outcome, no.
  • I want to stay fit and healthy – Again, the value is at best one step removed.
  • I want to indulge my passion for travel – This may be an area that advice can enable, mainly because of what are commonly the barriers to making it happen.
  • I want to live a life of constant learning – Again, about what they do.
  • I want to achieve self-actualisation – There’s not even scientific agreement about the validity of Maslow’s, let alone making it something that can be promised.

This is the danger for me in the approach.

Absolutely, the discussions about outcomes shouldn’t just be about money, but they shouldn’t be about values alone either.

Linking advice to living life a certain way is making promises that aren’t actually about what will be delivered.

It’s not quite snake oil, but it’s the same road.

Why do it?

That’s easy.

  1. It’s a powerful discussion
  2. It elicits a strong emotional response.
  3. It can provide clients with those ah-ha moments of clarity. and
  4. By design, it uncovers highly valued outcomes.

Effective, but also it could be argued, manipulative.

(Maybe even not entirely ethical, depending on the gaps between expectation and outcome further down the track).

I get that many will disagree – hopefully not with the same indignant fury I saw that day some time ago – but the point is that maybe there are some areas that we should be careful being so comfortable diving into.

We are not counsellors qualified to prod and poke at people’s emotional foundations.

We may sometimes find ourselves in the same neighbourhood but the fact is

  1. Most of us are not trained, qualified or licensed to do so, and
  2. Our intentions are not guided or bound by the same ethical and legal commitments of those who are.

They do it to fix underlying problems, they are ethically obligated to approach them in a clearly specified manner.

Using this as a sales process – however pure the underlying intentions – is at some level about “winning” a client.

Your intention may be for them to achieve their goal, but where is the line drawn that acknowledges that living life according to certain values is about what they do, and you are only part of it?

Sometimes the tools being taught to enable this discussion – singular questions that focus on asking how people feel about money, or what’s important to them about money – are sub-sets of larger bodies of expertise, such as NLP.

Small soundbites of a larger, deeper knowledge being taken and applied without any guarantee of true understanding of the mechanisms at work.

It’s not about goals or values.

Why does this have to be about values at all?

At the core of this philosophy, it’s about outcomes. The difference of opinion lies in the outcomes we can reasonably promise.

In truth, like every buying decision every person on the planet makes, it’s really about transformation. The shift from where we are to where we want to be, and the methods employed to make it happen.

Yes, saving more of your income will give you a greater opportunity to grow wealth, and it will most likely improve your quality of life, but is that a promise I can/ should habitually make?

Investing with greater levels of knowledge and a longer-term view will help create financial independence, but it may not move me to the highest levels of Maslow’s Hierarchy (as the growing number of the world’s billionaires continues to demonstrate).

It’s the wrong proposition.

Knowing where the line is

Google once boasted a hiring process celebrated for its effectiveness and comprehensive nature.

Famously, one of the final stages involved asking candidates questions the interviewer knew they did not know. If they tried to fake it, they failed.

It was a test of whether the candidate was self-aware enough to know and admit where their knowledge and expertise ended. It’s also supposedly a marker of intelligent people – to know when they do not know and tell others (and themselves) the truth.

We are not counsellors. We are not psychiatrists. We are not psychologists.

We have every right to have conversations about what people want to do with their money and work back from there. In fact, I believe this is a great way to approach the financial advice discussion.

But to promise people a life that is aligned with their values as an outcome?

There are many examples of advisers getting themselves into trouble making claims to be something they are not and being able to deliver something they cannot.

There Are Always Lines That Are Unwise To Cross, And The Values-Based Approach Often Strikes Me As A Step Beyond It.

Related: How To Optimize Your Fee Model for Maximum Profitability