“I know someone who’ll charge me less”

/in , ,

You’ve all been there… the fight over price. You know you’re right for the client, you can add a lot of value, but you can see there is an immediate issue niggling away. You probe the client and they say something along the lines of, “Let’s cut to the chase, what do you charge as I’m talking to another adviser who will manage my assets for 0.25% p.a.”?

Assuming you charge 0.5%, 0.75% or even 1% p.a., what do you do?

 

1. Now’s not the time for negotiation

The fatal mistake is to start negotiating your price now. After all, the client has absolutely no idea what they are paying for at this stage, and the value that they will get from working with you. Obviously you can’t ignore the question, but the answer needs to be along the lines of, “I can hear that our price is a key consideration for you. Let me set out what we do first, as there are a range of different options available to you”.

Don’t let yourself get dragged into a price war at this stage!

 

2. Go through your normal initial meeting process

This is where you take control of the meeting again. Rewind the meeting to understanding the client’s objectives (through careful, open questioning) and then presenting how and what you do. This is where you set out your advice process, your annual review meeting process and the ongoing service packages that you offer. Assuming you offer differentiated service levels for different segments of clients, your client will now see what you have to offer at different price points. If the client wants rock bottom pricing, well then he / she will see that they won’t be getting a premium service at that price level.

In order for your competitor to offer such a low price, they are probably not promising anything! So the other advantage of taking the client through your approach is that it will demonstrate the significant advantage of working with you as opposed to your competitor.

 

3. Be firm and brave!

Stand by your pricing as a premium advice provider. Acknowledge that you are more expensive; your client will actually respect you for this. Yes you can have lower cost packages, but within these the client should be left in no doubt about what is included and more importantly what is not.

What if the client looks for your premium service package for a lower cost? Well then you’ve a choice to make! Yes, you can be flexible, but I suggest only if there is a good reason… maybe the client is an important access point to an attractive target market, maybe you see broader opportunities with them. Don’t just agree without a reason, or otherwise you will simply start dropping your price at the first hint of a push-back from anyone. Sometimes it’s better to walk away, rather than agreeing to a price that doesn’t make economical sense to you.

 

4. Make sure you can deliver… and prove it

If you want to charge higher prices than your competitor, you have to able to deliver more. So it is very important that you can actually deliver what you promise. The last place you want to end up in is the dreaded “over-promising and under-delivering” experience for clients. This is the certain road to losing clients.

Of course your prospective client won’t have experienced your service at this stage of your relationship. So this is where you need to be able to call upon the experiences of other satisfied clients to add validity to your promises. This is where those client testimonials, LinkedIn recommendations and case studies of previous work come to the fore. They paint the clear picture of what your prospective client can expect.
5. Add value beyond the sale

Finally look to add value beyond the sale. Are there services that you can offer to your client that sit outside of your service packages? Maybe you can provide a willing 2nd opinion on any broader issues they might have in relation to financial planning? Maybe you can give them access to a broad network of business professionals that can help them in running their business? Or maybe you can refer some of your contacts to them as potential clients?

 

At the end of the day, you’ve a choice to make. Is your competitive advantage based on offering your services at the lowest price, which ultimately will be a race to the bottom? Or can you offer superior value and build your business around delivering this value, at a higher price? The choice is yours!

 

Are you really doing lifestyle financial planning?

/in

There has been quite a significant movement over the last few years of financial brokers or advisers repositioning (or simply renaming) themselves as financial planners. This makes a huge amount of sense, because of the value that lifestyle financial planning brings to people’s lives. But it only makes sense when lifestyle financial planning is what is actually being delivered.

 

Why is Lifestyle Financial Planning so important for you, the planner?

There are two answers to this question. The first and most important reason is because of the impact it has on the lives of clients. It’s not about investing money, it’s about helping clients to achieve their lifetime goals and dreams, and to lead more fulfilled lives through making behavioural changes. Good financial planning simply improves the lives of clients.

The second is a defensive reason. I still haven’t heard a reasonable defence of how traditional financial advisers will be able to defend themselves if or when a proposition similar to Vanguard’s lands on our shores. As it will one day. For those of you who are unaware, Vanguard rolled out a new proposition in the UK this year, offering their passive funds directly to investors with an administration charge of 0.15% of assets. And the charge is capped at asset levels of £250,000. On top of this, they are hiring 3,000 CFPs who will give advice over the phone to clients for 0.30%. If all you do is help clients make investment choices, how will you compete with that?

 

What is lifestyle financial planning?

It consists of four main phases, and it’s not lifestyle financial planning if any of these phases are skipped over. The four phases are

1. Discovery

This is the phase that gets skipped over the most, which is a shame as this is the most important of all of the stages. This is the phase where the planner finds out the lifetime goals and ambitions of their client, where the client can visualise the outcomes in their own terms – the life that they will lead, the possessions that they will own, the impact they will be able to have on the lives of others, what they will do and achieve in their lives.

Until you know the answer to these questions, what are you planning for? Just building a pot of money with no idea of what it will allow your client to do?

This phase is carried out by careful and well thought out questioning by the planner. And then listening intensely. It is not “airy fairy”, instead it is the most important conversation that you will have with your client.

2. Planning

This is where the planner then uses his/her expertise to develop the roadmap for the client to get from where they are today, to achieving the life they visualised in the discovery phase. This is an area of comfort for planners, where you can utilise all of your experience and technical skills to develop a plan for your clients. As a result though of the comfort at this stage, some planners rush to it without properly completing the discovery phase – when that happens, you are no longer carrying out lifestyle financial planning.

Central also to this phase is the use of future cashflow planning. Again without it, it’s not lifestyle financial planning. Using this process you can demonstrate to clients if they are on track to lead the life they visualised and if not, what they need to do to get on track. You can show them the impact of unforeseen events and how to plan for them, the impact of changing goals and of course the actions they need to carry out, or products they need to put in place to achieve the plan.

3. Implementation

The most straightforward of all of the phases. This is where the planner assists the clients in carrying out the required activities (e.g. budgeting, bank accounts, wills, power of attorney) or putting the required financial products in place that will play a role in achieving the goals of the plan.

4. The ongoing journey

This is again a really important stage that sometimes doesn’t get enough attention. Regular contact and scheduled meetings sit at the heart of lifestyle financial planning. The ongoing interactions turn the plan into a real journey towards the client achieving their lifetime ambitions. They are the opportunity to review and restate / change goals, review the progress and performance of the actions and products that were implemented and keep the client on track in terms of their behaviours with their money and their investments.

Without these meetings happening as scheduled, it is akin to pushing a boat away from the harbour wall to sail the stormy seas alone… You need to be beside your client at every turn, helping them to navigate their way towards their dreams.

 

If you are carrying out these four phases of work consistently and expertly with your clients, you can change their lives and help them achieve their desired goals and dreams.