by Tony Vidler
During a panel discussion at a conference this week I was asked a simple, but loaded, question:
What is the biggest future issue for financial advisers specialising in business insurance?
I qualified my answer by saying that the biggest issue is the same one that faces all financial advisers regardless of their area of specialisation.
The biggest issue is managing the transition from product-focussed solutions to advice-based relationships, and the way to do it was to focus on removing complexity from clients lives.
Many advisers think a product solution does that, especially when there is a little bit of advice wrapped around it. For instance; Many advisers think putting in place an insurance policy to cover the loss of a business key person removes complexity. It doesn’t for most people. It introduces further complexity in the form of far more paperwork and jargon which is intimidating in itself, and which if not put in place correctly will actually add further complexity in the event of a claim when there are significant sums of money swirling about in the wrong directions.
Of course all financial advisers provide advice during this process, however the advice component of the process is rarely valued anywhere nearly as highly as the product solution by the advisers themselves. Advisers often believe that the value they created was the delivery of a product.
“I got the insurance case placed for them.”
“I found the right managed fund.”
“I found “the best” product….”
…and on it goes.
For the increasing number of financial advisers providing more holistic solutions and advice, especially those in the full financial planning arena, usually do not feel that this observation applies to them. They ONLY provide advice, right?
How does that advice look to a client?
Neither of these approaches reduce or remove complexity from clients lives. One simply introduces new things they do not understand that well, and the other approach simply introduces new concepts that they don’t understand that well.
Great advice removes doubt. It provides clarity and direction. It instills confidence that a plan is likely to succeed.
These things in turn encourage client participation and engagement in working with a professional adviser.
I was delighted to see further in the conference programme that Michael Kitces and Jim Stackpool both delivered high quality sessions on just this area alone. Each looked at the issue from a different perspective, but each provided fabulous insights into the core issue of removing complexity from clients lives through delivery of quality professional advice.
The real value that a professional adviser provides lies within their ability to change a client’s behaviour and help them achieve an outcome they seek. It isn’t the product which provides the value. It is the ability to grasp and teach difficult theory which is valuable.
It is the ability to know how to best influence a person to make the necessary change, and then support them while they do so, that is the area of greatest opportunity.
Making the transition from product-focussed practitioner or clever technician to a life-changing-coach is the advisers greatest challenge.
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