by Tony Vidler
The easiest way for advisers who are worried about trying to charge fees for their expertise or time is to sell a service which is not product related at all. This seems daunting to the many financial advisers who have “grown up” in an environment where they were paid by commissions from product placement. That model has worked for pretty much all of the last century, and entire business models have been built around it, despite the obvious conflicts that presents to advisers.
This model is however increasingly being challenged from many quarters. Consumers and bureaucrats are pushing for the removal of conflicted advice globally, and a constant question on the lips of many advisers is
“How do I make a transition to providing advice on a pure fee basis from a commissioned-product-centric business model?”
There are a number of ways one can do it of course, but the easiest by far is to select an area which is a common concern for a majority of clients, and which is also fundamental to the entire financial advice process, and then add it in as a paid service. It is an area of advice which does not necessarily involve product placement at all.
The standout opportunity is providing comprehensive advice on Debt Management. It is real issue, for the majority of households in the majority of developed nations, and for the majority of advice clients.
Student loans or higher education costs, personal mortgages, investment property, consumer finance for household goods….they are all on the rise in nearly every developed nation. From my own experience over the years I have not found a single client who was not willing to have a conversation about how to save money and time on their debt. It is a genuine area of interest to the majority of retail consumers, and also a genuine area of expertise for most financial advisers.
It’s a no brainer. Have conversations with clients about how you can help them plan to get themselves out of debt sooner or more affordably and charge them for the advice.
For the majority of clients the cost of the advice is insignificant in relation to the amount they can save. Showing them how valuable a plan to accelerate debt repayment is, and the need for ongoing reviewing and monitoring of the debt management plan introduces the coaching element which is so critical to delivering valued advice.
It is an easy conversation to have with clients. It is something they want to talk about. It is easy to articulate and relate the value of the advice component. It is easy to put a fee on that expertise.
It’s a no-brainer.
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