Your IndustryOct 23 2014

How credible is your advice service?

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
comment-speech

What was the last thing you bought? It might have been something as trivial as a bottle of water, as pleasant as a pint of craft ale, as necessary as a washing machine or as big and important as a house.

Whatever it was, have you ever stopped to consider why you ended up with the purchase you did? It is a worthwhile exercise. When we buy things we usually go through the same process no matter what it is we buy. How we go through that process is influenced by all sorts of factors. And by taking a moment to think through that process, advisory businesses can start to understand how it is that customers came to the decision to buy, or not to buy, their advice services.

Imagine it is Friday afternoon. Maybe I am just getting off the train in York and I suddenly realise I am thirsty.

What happens next? Chances are I will start to look around for options. Where can I get a drink? There is the convenience store with bottles of water, fizzy drinks and juice. I could always find a tap and get some council pop. And also I know that round the corner there is a good pub serving some fine local ales.

I evaluate all of the options at my disposal against each other. There are plenty of factors that could influence my decision. My simple recognition of a problem that needs a solution has all of a sudden sparked in motion a chain of events, most of them happening in my head at great speed, which is influenced and driven by a whole host of factors, from the very fabric of who I am right through to what is happening around me at that particular moment.

The water would be simple and refreshing. But let us assume I decide to have a cheeky pint. If the experience of buying that pint is a good one, the chances are I am not going to go back and evaluate the other options all over again – I am just going to settle down for another pint.

The process of buying that pint is replicated the world over, billions of times a day, by consumers of all types buying all manner of goods and services.

Leading academics and strategists have pored over this process, and in essence it can be boiled down to five steps:

1. Problem recognition – for example: I am thirsty.

2. Information search – for example: what is there to drink around here?

3. Evaluation of alternatives – for example: the pros and cons of the pint versus the water.

4. Purchase – for example: I am off to the bar.

5. Post-purchase evaluation – for example: would, and should, I do that again?

For any purchase there are of course myriad external influences to take into account. Who am I? What are my age, culture, religion, ethnicity and income? Who are the people who influence me most, like my family, friends, colleagues or even idols? Am I currently happy, sad, laid-back, in a hurry, with friends or alone? The key influences on the process can be boiled down to the personal, psychological and social. Those influences will ultimately decide whether I progress through any buying decision and decide whether I will make that decision again or not. It is worth analysing your last purchase of anything and seeing if you can break the model.

Consider how your clients decided to engage your services. Firstly, they must have a reason to purchase financial advice. There must be a problem they have identified, such as the need for a retirement income. They might well have found several ways they could address this problem, either by themselves or through different financial services options. They will have evaluated whether or not what you offered was the best option and, having purchased your advice, they will definitely have made a judgement about whether or not that was a good idea, and if they would do it again.

A fundamental question for any advisory business is how well aligned you are with the buying process of your clients.

Are you influencing the identification of problems for existing clients and prospective clients? Are you helping guide them through the complex world of their finances and clarifying the need to employ your services?

Can clients easily find information about you and your services so that when they identify a problem, you are part of their information search?

Are you confident that your client-facing profile and the output of your advice process is in good enough shape to come out on top when they evaluate the options in front of them?

It is clear that the key influences on the consumer-buying process for advice are how credible the advice service appears, how connected to the needs of the client are the solutions offered, and how consistently they deliver – not which funds, platforms, or tax wrappers you choose for clients.

Dan Russell is director of sales and marketing for Verbatim