In the latest article on transition planning, Brett Davidson, managing director at FP Transitions UK, looks at developing a marketing message
Developing a key marketing message is one of the most difficult issues for any business. This is particularly so for a financial planning business transitioning to fee-based advice because such a business undertakes a variety of things for clients in a broad range of areas.
Even though a fee-based business may be very broad in its service offering, this just won't do in its marketing and communications. You may have noticed that even the world's biggest brands manage to distill the essence of what they do for their customers into a sentence of five words or less - for example BMW uses the slogan "Sheer driving pleasure", while Tesco uses "Every little helps". They do this to highlight 'The One Thing' they want customers to know about their business and to differentiate themselves from their competitors even though they may do or sell much the same things as them.
In marketing it's better to be different than it is to be better. To communicate your marketing message to customers - both new and existing - your business must be clear on exactly whom it works with and what it does best. This knowledge can then be crafted into three key messages:
My business in a sentence (of five words or less);
My business in one minute; and
My business in 500 words.
The first message is your tagline that will accompany your logo and let people know instantly what your business is all about. I know you do lots of great things, but you need to tell me in five words or less everything that your business will deliver for me as a customer.
The second message is what marketers call "the elevator pitch". If you were in an elevator and someone asked you about your business, what would you say? We often get asked about our businesses and need to have a well-crafted response that we can deliver in less than one minute that let's the person know exactly what we do, for whom, when and how. Furthermore, your staff can use the words to ensure that every member of the firm presents the business effectively in any situation. In marketing the magic word is consistency.
Here is the elevator pitch for FP Transitions UK when talking to an adviser:
I do what? FP Transitions helps advisers' transition from transaction-based businesses into modern fee-based advisory practices.
How? We do that using a series of practical tools that show people how to make the changes and by focusing on helping the adviser communicate their true value to customers.
For whom/why? We work for people who want their clients well serviced and want to see their own time rewarded appropriately.
When? People get us involved when they start to feel frustrated with their business or when they want to find the missing pieces of the puzzle quickly.
To make people feel? Clients tell us two things have happened - profits have increased and the fun has come back into their business.
The third message is something (pre-written) that can be supplied to media, PR firms, conference organisers and a range of other potential marketing opportunities, to describe your business in a short article. The content will depend on what issues your business is trying to get people to recognise or understand but may include a paragraph on the following as a rough guide:
Your philosophy on financial planning (what do you believe strongly?);
Your process (why it is different to other advisers);
The value you add to clients; and
Your view on the future of the industry.
This all sounds relatively straightforward but can be excruciating to develop. However, all the hard work is certainly worthwhile. Having developed the three key messages, you can now communicate the complex range of products and services that is your business, simply and clearly. This allows customers to understand what you can do for them. Lengthy and garbled explanations may be more complete, but they won't get you more business.
Armed with the knowledge of whom you are targeting and what you can do for them packaged into some crystal clear messages, you can now start to look at your fee-charging methodology. To do so before you reach this point will more than likely lead to:
A poor fit with your service offering; or
A need to change your fee-charging method in the future.`
In the UK at present many advisers are heading down the hourly rate fee-charging route without having a real understanding of why that does or does not suit their business model. Don't get me wrong, I am not against hourly rate charging, but it only suits certain types of financial planning businesses.
Other charging methods that can be considered are:
Sliding scale fees;
Plan, implementation and review fees;
Value-based fees; and
In fact, you may use more than one fee charging method for different client segments within your client base. But you can't make that decision until you know:
Who your target clients are;
What you will do for them; and
What your differentiated message is to the marketplace.
It is important to recognise that there is no perfect way to charge a fee - or levy a commission for that matter - there is only the way that works for your clients and your business.
Let's consider flat fees - for example, every initial plan/advice costs £2,000 regardless of client circumstances and for the ongoing review service everyone pays £2,000 a year.
The pros of such a system are:
It is simple to understand and explain;
There is no product bias in the advice;
It positions the business clearly as a fee based service;
The business does nothing for free;
Clients can easily benchmark the value they expect to receive against the cost;
Advisers can clearly demonstrate the value they will add relative to the fee;
If costed correctly every job adds to the bottom line; and
It's simple for clients to explain to potential referrals.
The cons are:
Substantial fees may put some smaller clients off (which may be your intention);
Fees may periodically need to be increased to adjust for increases in business costs, inflation, or to increase profits; and
Some clients' circumstances don't fit easily into the pre-designed category (this might be a positive if you are very disciplined in who you want to deal with).
It is beyond the scope of this article to go through every example but you get the idea. A similar analysis of any proposed fee methodology will give you an idea as to its appropriateness for your business. The key is having a fee charging method that is transparent, adds value to the client and your business.
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