Don’t be ashamed of selling!

I was with an adviser some time ago who ticked me off on a couple of occasions when I mentioned the word selling. He contended that he is an adviser and not a salesman. I say that you need to be both…

 

There’s nothing wrong with selling!

For some people, selling is a dirty word. Particularly so when you are dealing with financial services. That’s understandable I believe when it comes to mis-selling, however this is an experience being suffered thankfully by fewer and fewer clients today. Financial advisers have really raised their game, industry standards have increased, and compliance oversight has increased too – all of these factors resulting in fewer incidents of mis-selling. Yes, there have been a few high profile cases unfortunately in recent years that again undermine trust, but these are not representative of the market in the main.

In fact these cases increase the need for selling! Not of financial products though, instead there’s a need to get out and sell the value of doing business with you!

 

Selling is exchanging

The Wikipedia definition of selling is; “Selling is offering to exchange an item of value for a different item”. A key part of your job is to convince your clients to exchange your item (advice, guidance, expertise) for their item (commission, fee). So selling is not passé. The financial advisory business model still needs selling.

The old days of “the insurance man” out selling products are thankfully long gone. This was where the seller was very transactional focused, having access to a very narrow range of (poor) products and their role was to convince people to buy these products, whether they really needed / wanted them or not.

The difference today of course is that the process starts and ends with the client. The transaction (if needed at all) is only a means to an end, a mechanism which helps clients to meet their own specific financial objectives. The value that the client gains is the advice, leading to better financial and life outcomes for them, rather than the product itself. Of course nothing stays the same as well, so advisers also need to sell the benefits of ongoing monitoring to ensure their plans stay on track to achieve their objectives.

 

Selling is necessary

Independent financial advisers provide a really valuable service to their clients. However prospective clients who haven’t experienced your service and seen the value being gained, may still be living in a world of mistrust of all financial advisers. So you’ve got to convince them otherwise and sell them the value that they will derive from having an expert on their side of the table, guiding them through the complexities of the world of personal financial planning.

To do this, you need to have developed a very robust proposition for your clients and then be able to communicate this in a very engaging way. If you can’t do this, they won’t see the value that they are getting and of course there is no way that they are going to part with their hard earned cash to buy your services.

 

Don’t be ashamed of selling, it’s a very noble pursuit when carried out with the right intentions! You can be very proud of the product (advice) that you provide and of the value that clients get from exchanging value with you. So get out and shout it from the rooftops!

Get set for a strong finish

Most advisers that I talk to are having a good year in 2017. Most are somewhere on the journey to building a business around your advice proposition, and this in turn is driving higher levels of assets under management and more protection product sales. But most also recognise the need to not take the foot off the gas in terms of new client acquisition.

So here are a few ideas that you can work on over the next 4 months that will set you up for an ever better year in 2018.

 

Set activity targets

Activities drive sales, so set yourself clear activity targets. Set monthly or even weekly targets for the activities that work best for you. These might include;

  • Prospect / potential client calls made
  • Sales emails / newsletters to prospects sent
  • LinkedIn connections made
  • Networking events attended
  • Client meetings arranged
  • Client reviews carried out etc etc.

And then track these targets carefully and measure your progress against them. We all know that “what gets measured, gets done”…

 

Get to work on your pipeline

credible pipeline is a really important asset of your business. It’s no use if this is just a list of names of people that you’ve spoken to over the last few years. So it is well worth spending a few hours going through your pipeline from top to bottom. Here are some suggestions as to how you might improve the quality of your pipeline

  • Remove the dead wood – get rid of all those old prospects that you know in your heart are going nowhere. Don’t waste any more time on them.
  • Review recent additions to the pipeline that you added in 2017. Are there people here that may have simply been delaying action until later in the year? Are they now worth a call?
  • Qualify your pipeline prospects. Prioritise them by their likelihood to become clients or transact business with you.
  • Understand and capture the stage you are at with each prospect, exactly where they are within your sales funnel. This will help you to ensure your next activity / approach is the right one.


Review your marketing supports

I know this one regularly raises its ugly head… But it really is so important, as old (even worse if it is actually out of date) marketing collateral can be pretty damaging. It can show you as out of touch, or even worse, not caring about your business. The main supports to review and update include,

  • Your client value proposition – have you updated this, your process, your service supports and your remuneration structures in line with your changing business model?
  • Your website – does this really reflect your proposition? Also make sure you read through every page and remove / amend any time sensitive information.
  • Your LinkedIn profile – is it fully up to date in relation to your skills. Remember that when someone Googles your name, your LinkedIn profile is often the first search result that they will click on.
  • Your sales presentation and reports – many advisers use templated reports. These make a lot of sense, but need to be reviewed regularly. Make sure that the information in these is bang up to date.

 

Get updated testimonials & LinkedIn recommendations

Research has shown that approx. 80% of people trust peer recommendations, while only about 14% trust advertisements. So talk to your satisfied clients about providing you with a testimonial that you can show on your website and in sales presentations. The key here is getting their permission to use their full names to make the testimonials fully credible. Better still, if your client is a connection on LinkedIn, ask them to make the recommendation through LinkedIn, with you also displaying it on your website. That way it gets even more visibility.

 

Work hard on referrals

All advisers know the value of referrals, however some don’t have a clear process for getting them. Develop a process, make it a part of every review meeting with clients and use the likes of LinkedIn to help you identify the people that you want your clients to refer you to.

 

Put extra effort into networking

Some advisers really struggle with networking; they really don’t enjoy it at all! However it is a very necessary marketing activity – the old adage springs to mind that if you want to get knocked down, you must stand out in the traffic! Identify relevant networking groups and then set yourself clear objectives – these might simply be the number of meetings you attend and the number of people you make the effort to meet at these events. Again you’ll get out of them what you put into them!

 

Work out what your introducers need

Introducers are also identified as a very rich source of potential clients. However the days of ringing a local accountant, agreeing to split commission and then sitting back and waiting for the clients to roll in are long gone… Introducers today need to be crystal clear themselves about what you do and the value that you offer, both to them and to their clients. So spend time developing your proposition for introducers and then develop marketing activities to stay top of mind with them.

Working your way through this list will help you to achieve a strong finish and will set you up nicely for 2018.

How can you secure your ongoing future income stream

Many of the advisers that I talk to regularly speak of the dual challenges of earning enough revenue today from new business to pay the bills (while hopefully having a bit left over), and also moving their business model towards building up a growing, recurring revenue stream. Most are somewhere along the journey of shifting to a model where clients are paying for the advice they receive, rather than the products sold. So what are the key factors to consider in building your income stream?


The products sold still play a role for most advisers

Product sales still play a role for many advisers. First of all, when it comes to protection products, the providers have helped advisers in this regard by introducing commission models in recent years that offer attractive spread commission options without the dreaded commission claw back in the event of policy lapses. This allows advisers to build up their ongoing revenue stream. Once the client continues to require (and can afford) the cover, and the adviser ensures that the cover in place continues to be the best available, the adviser stands every chance of this revenue continuing.

The situation in relation to pensions and investment is a bit more complex. Most advisers have moved away from large upfront commission payments on both regular and single premium business, towards lower upfront payments (by commission or fee) and a share of the ongoing annual management charge (AMC) by a trail commission.

While building up revenue through trail is challenging in the early years while asset amounts are lower, this basis is obviously more attractive in the long run as the adviser’s funds under management grow. Trail also removes the dependence on future premiums for future remuneration. Trail is also easy to explain to a client.

Of course many of you also charge fees for your advice, so fees and commission make up your ongoing income. But how do you justify this ongoing income?

 

The brightest future is in lifetime financial planning

The future is in financial planning, because this is where you can add the most value. Helping your client to understand their lifestyle objectives and to set financial goals, examining their current situation, and then devising and implementing a plan to close that gap. And then by working with that client year in and year out towards the achievement of their goals, you can build and easily justify your ongoing income.


You need a clear ongoing advice proposition

To show your ongoing value to clients, you need to have a clear ongoing value proposition for your clients. Ongoing work needs to be a core part of your proposition, not a “by the way” 10-second conversation at the end of the initial product implementation. Clients do not want to feel “sold to”. This is exactly how they will feel if you don’t have a strong ongoing advice proposition to offer them. Delivering this is a natural move for those advisers who are shifting their focus from a product sale approach to an advice based offering.

Apart from obviously reviewing a client’s financial plan and product portfolio to ensure they are still on track to achieve their objectives, a structured and well thought out review approach offers you a great opportunity to remind your clients where you’ve added value to them over the year. This is where you can remind them of the growth they’ve achieved in their investment portfolio that you put together for them, the tax they saved as a result of the retirement plan you designed for them, the money they saved by you restructuring their protection portfolio and health insurance etc. Indeed one of the great benefits for those advisers who provide future cash flow modelling for their clients is it creates a natural and very valuable engagement with the client every year.


The benefits for you are huge

You as an adviser also benefit, as a structured and well thought out review will surface any cross-selling opportunities that may exist. However the critical benefit to you is the strengthening of your relationship with your client, increasing your chances of retaining the client as their assets under management, and in turn your trail commission, increase. Surely this is a better approach than just hoping the client won’t be tempted away by another adviser who simply undercuts your trail commission amount?

And of course one of the main aims of many advisers is to build up value in your business. This is best achieved by being able to demonstrate a strong, stable revenue stream. Now is the time to develop your ongoing advice proposition to help you build up this valuable revenue stream.

What do you believe are the critical factors to help you build up your ongoing revenue stream? All your comments are very welcome below.

Segmentation of clients is no longer optional

Thankfully there are very few financial advice firms remaining who see segmentation as one of those tasks to be done “when they find the time”. Which in other words is never.  There are now so many compelling reasons for segmentation of clients to be seen as one of the most important tasks a broker needs to do on an ongoing basis. Why?

Because at the end of the day, are you able to (and should you) provide a top-drawer service to every one of your clients? The answer to this most often is no. After all, you derive hugely varying levels of income from each of those clients so surely the clients that are driving very high levels of income to your business deserve a higher level of service?

Of course this is not at all a novel concept! Every time you step on a long haul flight, it’s immediately obvious. Turn right for the cheap seats in Economy or turn left to be pampered in Business Class or 1st Class. And then when you book a hotel, you can pay less for a standard room or pay more for a suite with all of the bells and whistles that come with that.

Now let’s take this concept into the financial advice space where many Financial Brokers see their future remuneration model as centred around trail commission. If I come to you with €100,000 to invest, your trail commission might be €750 p.a. (assuming you charge 0.75% of assets). All sounds good.

But what happens if I’m singing your praises and my sister rocks up to your door with €500,000 to invest? Now your earnings are €3,750 p.a. from her. This is perfectly justifiable if your proposition stacks up. But she is also justified in asking what she is getting for this €3,750 and you need to be able to demonstrate additional value to her. And if there is no difference between the services offered in each of these situations, I suggest you’ve got a challenge on your hands… Simply adding trail commission to policies without thinking through your various client propositions is fraught with danger.

And not completing a robust segmentation of your clients is also very dangerous. Even without doing a segmentation exercise, I’ve no doubt that a small number of your high value clients get your best service at all times. But inevitably what happens is that there are other high value clients that slip off your radar. Either you don’t realise that they are high value or they just aren’t demanding. And then some low value clients who are constantly on the phone get a huge amount of attention. That’s hardly fair, is it?

So what do you do?

 

Segment your clients

For starters, do a proper segmentation exercise. Know who is valuable to your business and who is not. Don’t be put off from doing this work with the excuse of “it doesn’t capture the full picture”. Yes, there will always be exceptions within your segmentation – for example a client with very little business with you, but who constantly refers other clients to you is actually a high value client to you and should be treated as such. But don’t start with the exceptions; work out how to deal with them later on a case-by-case basis.

 

Develop your service packages

Develop service packages for your business that reward clients depending on their value to your business. Make your high value clients feel really special, reward them for trusting you with their money by giving them a truly rewarding client experience. Build a moat around them and pull up the drawbridge from your competitors by providing a second to none service.

Let your mid-tier clients feel valued by your business, while at the same time making them aware that there is lots more you can do for them (if they are willing to pay for it).

And of course your no/low value clients will begin to realise that it’s a business you are running and that they don’t have 24/7 access to you. If they want access to superior service (ongoing advice from you), they pay. The same as when they book a flight or a hotel room.

 

Don’t be afraid to say no

Yes, your lower value clients may want a better service possibly than you are offering and might try to demand it from you, without paying for it. Don’t be afraid to say no or insist they move to a higher value service package with greater remuneration for you. You’ll only be doing this with your no/low value clients… And they are not of much value to your business. Put your time into those clients that are of value to you – this is what your clients deserve and what your capacity allows.

The days of a “one size fits all” approach are over. Give your clients a service that they want and deserve.

Annual Meetings are your most important client interactions

Annual Review meetings are so important in the eyes of many clients. And if they are not, they should be. And it’s your job to convince clients of the importance of these meetings. This is particularly important as we see the news of Vanguard offering fund admin services in the UK for 0.15% and fund fees from as low as 0.07%! In the US, they offer financial advice (delivered by CFPs) for an additional 0.30%. So they will offer an “all-in” fee for advice and investment management for a little over 0.5%.

If this arrived on our shores, how would you compete and how would you justify your ongoing remuneration, on top of the investment management fees?

I shudder when I talk to some financial advisers and hear the haphazard approach that is taken to review meetings. They see it as a win when the client says they are happy not to meet! Could you compete with Vanguard on this basis?

The importance of developing an engaging Client Value Proposition has been picked up and acted upon by many Financial Brokers in the Irish market over the last year or so. A lot of time and effort has gone into identifying where clients are experiencing value, the advice process that is being used, the client services that are provided and indeed how all of this should be paid for by clients.

I can tell you as the client of a financial planner that I can’t at this stage really remember our initial interaction. But I remember clearly our last review meeting, and I’m also very clear about what we will discuss at our next meeting. And that’s the way it should be. The initial advice stage set me off on the right path; the review meetings keep me on it.

With some advisers, the focus is almost exclusively on attracting new clients, at the expense of minding the existing ones.  However having a brilliant review meeting is the means by which you’ll lock in those clients year after year, and as a result enjoy an ongoing income stream from the clients.

As a core part of your initial engagement with a new client, it makes sense to explain to them in detail what will happen every year into the future. It’s not enough for review meetings to be positioned as a “by the way” 10-second conversation at the end of the initial product implementation.

And what should a review meeting include? Well of course there is the standard (and necessary) tasks of reviewing a client’s portfolio, getting up to date values and potentially even writing a short review report. And of course you want to explore further protection needs based on changing circumstances etc.

However the real opportunity to demonstrate your value on an ongoing basis to clients rests outside of the traditional review meeting agenda. Why not take a little extra time and set out for your clients some financial benefits that you’ve delivered to them such as;

  • The growth in actual euros of their investment portfolio
  • The tax saved as a result of their pension plan and any other tax efficient policies in actual euros.
  • The actual money saved in euros as a result of a protection review you carried out previously.

Now your ongoing fee / trail commission starts to look very small! However there’s still a lot more you can do at these review meetings to demonstrate further value to you clients.

  • Help your clients with their household budgeting. This is an area that many clients continue to struggle with. By getting clients on the right path here and reviewing it with them, you can add enormous value to them.
  • Obviously if you carry out future cashflow planning using Voyant with your clients, this is an exceptionally valuable exercise every year. This can completely change the conversation, enable you to look at “what if” scenarios and approach the client’s financial affairs in a very engaging and collaborative way.
  • Talk to them about their broader financial needs where you don’t provide the solutions. You can add value by tapping them into your network of solicitors (for their will or enduring power of attorney), tax advisers (tax advice) or accountants. Now you’re the person centred right at the hub of their financial affairs.

Review meetings are also the opportunity to remind your clients of the work and interactions you’ve had with them throughout the year – the rebalancing of their portfolio that you carried out, the interim meetings you had, seminars you invited them to, the content you sent them etc. How can a client question your ongoing fees when they realise that you are actually providing value to them right throughout the year?

So place review meetings at the heart of your proposition. Make them memorable and ensure your clients come back to you year after year.

Is it possible to introduce or increase trail with existing clients?

How do you convince an existing client to agree to an increase in trail commission or an introduction of it on pension or investments business written some years ago? How will you answer the pushback that you’ve already been paid?

I’m working on the premise that the overall charge is going to increase. Of course if you can receive a trail within the existing price structure (with the product provider taking a lower annual management charge), this conversation will be a lot easier!

 

When does trail commission / a fee make sense?

These remuneration bases make a huge amount of sense when real, ongoing value is provided by you. To my mind it’s as simple as that! I would argue that if the product provider is providing all of the value – why should you be paid a fee or trail commission? But if you are providing expertise and ongoing value to your clients, year in and year out, ongoing charges make sense. I’ve worked with a number of advisers over the last year that have each said that clients don’t understand when a fee is not charged! When clients receive value, they expect to pay for it…

So you first of all need to add real value to your clients. You then need to ensure that you demonstrate this value in a way that clients clearly recognise the value that they are getting. And then you need to remind them of the value that you are adding, again and again.

 

Trail commission or fee?

If you’re clear enough about what you do and the value that you are adding, whether it’s a fee or trail is somewhat irrelevant, these simply become a method of payment. So really it shouldn’t matter…

But of course that’s not the real world. I know many advisers prefer trail as it is a bit more “below the radar” and you don’t have to ask for a cheque each year for your fee. Of course that is an easier conversation and is perfectly fine, where you are adding that ongoing value.

It constantly comes back to adding value, being really clear about your proposition and communicating what you bring to the table in an engaging fashion. We only have to look across the water at the UK, where trail commission as we know it is no longer allowed. The adviser can be paid on an ongoing basis from a policy, but the charge has to clearly link back to the value the adviser is delivering. This is very challenging for advice businesses that have simply collected trail commission without providing and demonstrating any real value. How will they justify their charge to their clients? On the other hand, it poses no threat to those advice businesses that are clearly demonstrating value to clients and having transparent conversations about how much and how they are being paid. Trail commission and fees are simply methods of collection to these firms…

 

What about existing clients though?

So that’s all well and good, you demonstrate the value that you will provide in order to justify trail commission to new clients. But how do you move existing clients onto a trail basis? How do you answer the client who challenges you that you’ve already been paid?

First of all, you need to provide clients with more than they have received from you to date, or at a minimum make them aware of all that you do for them. You need to set out clearly all of the services that you will provide to your clients that you hadn’t discussed at the outset – services such as;

  • ongoing portfolio analysis and restructuring
  • rebalancing
  • future cashflow planning – this has been the big innovation and the firm foundation of high value financial planning services
  • access to your network of specialists (tax advisers, solicitors etc.)
  • your market insights
  • the money you are making / saving them every year

At the start of your relationship, you identified the right product for your client and set up their policy, and were paid commission to do so. Now you are going to add real value to these clients through the range of advice-based services that you offer – and for this you must be paid, either via a trail commission or a fee.

You need to demonstrate that your proposition will add ongoing value year after year, for the lifetime of your relationship. You need to communicate this very clearly in an engaging way, and use case studies and testimonials to demonstrate the results that you achieve for your clients.

Doing these, you’re giving yourself every chance to gain the agreement of your client to pay you each year. Because the value they get will significantly exceed the ongoing charge that they will pay.

 

How do you convince your existing clients of the value that you add, and convince them to pay for this by a trail commission or fee?