Roger Brosch, chief executive of Foster Denovo, says advisers must change their mindset.
Following the Retail Distribution Review, financial advisers now have to put a price on the advice they offer to their clients. As a consequence of this change, I believe many will spread themselves too thinly by seeking out more clients in order to make the same income as before the changes.
And, I would argue that this, in effect, commoditises the service they offer.
Traditionally, many advisers have successfully looked after a small number of clients and this worked well when the overall rewards were greater; taking income from commission.
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Now, as advisers, we need to convince clients to pay fees upfront and, generally, the overall rewards tend to be smaller.
Advisers, though, can continue to remain successful but they need to change their mind set.
Instead of thinking of themselves as offering a ‘commodity’, which can be compared to the service offered by a competitor adviser, they need to concentrate on providing an ‘experience’ for their clients, thereby differentiating themselves.
In my opinion, it is vitally important for advisers to innovate and create a unique client experience.
They must provide a service that clients want and desire and always remind them of the value they provide.
Advisers need to develop a deep understanding of their clients’ needs. It’s not just about churning out facts and figures but more about helping them to carefully plan, on a short-, medium- and long-term basis.
They need to develop an emotional connection with the client over their finances, and help to create a strategy to achieve their goals.
Advisers will be required to adopt a whole new skillset – I believe those who blend life coaching with financial solutions and strategy will be the ones who succeed.
Everything centres around the initial objective document laid out between the adviser and client.
Once a connection is established, the value offered by the adviser has been identified and then it is just a question of innovating, and continuing to innovate on behalf of the client.
This will pose a greater challenge than many advisers have been used to, and they will need greater levels of administrative support. Although clients want access to reports, they don’t buy technology; they will always place more value on the relationship with their adviser.
Many advisers will be forced to invest heavily in marketing and also in systems support. There is no denying it will be a big commitment to make it work, and only scaled businesses will manage this.
Regulatory pressures are making the industry more challenging and more expensive to work within, and the margins are wafer thin. Those who become good at offering outstanding service will be the ones who win.
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