by Tony Vidler
How powerful would it be to quantify that in dollar terms for a client?
Everyone knows the maxim “time is money”. Everyone knows that all of us are perpetually trading off one against the other; spending money to save time; or; spending time to save money.
Most clients of financial advisers have busy lives and are continually trading off time and money as a way of life.
So why don’t we put it in dollar terms when we talk to clients about some of the value that financial advisers bring to their lives?
Let’s use an example briefly:
How many hours are involved in putting together a strategy covering all facets of personal financial planning, and then implementing it, and then monitoring it and adjusting along the way?
For a professional planner who is on top of their game it will probably take about:
So the financial planner – who is at the top of their game is putting in 22 hours of work for the client each year.
(do we ever actually tell clients that by the way?)
How long would it take an intelligent, well educated client who is time poor to actually do the same thing?
I estimate that it would take the DIY (do it yourself) planner something like:
So the DIY consumer is probably going to invest about 130 hours in doing what a professional will spend 22 hours doing. The “cost” to the DIY person is about $5,200 at their own hourly rate – but the opportunity and lost “life” cost?
If we weigh that up against what the professional charges for doing the same work – though theoretically more objectively and with astute judgement – what is the difference?
Is there a clear tangible value to the client from using a professional financial adviser then? It would certainly seem so – unless I am wildly miscalculating the time components.
We all as individual consumers outsource problems all the time to other professionals because we mentally make the time/money calculation, and then add in the “stress or hassles” factors, overlay that with “things I’d rather do with my life” and come to a pretty rapid conclusion that more often than not money is a lot less valuable than time.
Consider approaching the matter of the “cost of advice” from a similar perspective with clients.
Most times you will find that most clients quickly recognise a bargain price when it is put in this context.
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