Adding value to sustain business
I been guilty of focusing more on doing a good job for clients and less on the need to ensure that what I do is sustainable.
Many of the financial advisers and planners that I meet are rightly concerned about their clients and the advice that they offer them. Often they focus so much on the advice and forget they are in business – sometimes with dire consequences.
I have also been guilty of focusing more on doing a good job for clients and less on the need to ensure that what I am doing is sustainable from a business perspective. Whether we are business owners, or advisers working in someone else’s business, we sometimes need reminding that we do not work in financial planning (for example), we work in businesses where financial planning is done.
If you are the business owner you need to grasp that distinction and keep it in mind always, it is so easy to forget (if you are a non business-owning adviser, remember that you work for someone who is). And as a business owner you must ask yourself what it is your business does, and where you are adding value for consumers.
For advisers who may soon start working with fees for the first time, this could be a bit daunting, particularly if you have been selling products and been paid by commission. As Lord Sugar never fails to mention during each series of The Apprentice, if you are simply taking products and passing these to consumers without adding any value, you will either go out of business or make very little money.
In that vein, if all you think you are doing is flogging a product, you will quickly be undercut by someone else who will do it cheaper. We have seen this in the investment world with Hargreaves Lansdown and other low-cost distributors. Insurance and pensions are going the same way.
Simply acting as a product distributor will put you in the same league as the hard-pressed corner shop competing against the might of the supermarkets. You have only got to see how few high street motor insurance brokers there are these days to know that we are not really in the distribution business.
All firms, but particularly smaller firms like mine, need to know their target market, and what it is their target market wants to pay for. Whether it is advice, peace of mind, specific services, or all the above, we need to be very clear – because we are no longer selling pensions and investments. If the truth be told, we have probably not been selling pensions or investments for several years – our clients pay for what these products will do for them.
I often casually remark that most of my learning is not about pensions, investment theories or tax legislation – it is about people, psychology and marketing. Now that people have attained their level-four exams, they could do a lot worse than embark on a new course of learning in those three areas.
I often casually remark that most of my learning is not about pensions, investment theories or tax legislation – it is about people, psychology and marketing
Dennis Hall is managing director of Yellowtail Financial Planning
More from Dennis Hall
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- Providers making less effort to help with tax year deadlines
- Clients will question value for money of advice fees