The Top Challenge In Shifting From Product Sales To Advice Delivery
Advice Processes & Best Practice Advice & Financial Advice & Sales & Selling & Sales Tips

The Top Challenge In Shifting From Product Sales To Advice Delivery

June 4, 2024

by Tony Vidler  CFP logo   CLU logo  ChFC logo

Lots of financial advisers are still figuring out how to get paid for advice delivery, not just implementation of product solutions.  Now, the simplistic answer is of course:

“easy…just position for it and tell clients that’s how you work now.”

That answer really is glib though and doesn’t touch upon the real reason it is so difficult for so many. The real reason is the same for all financial advisers regardless of their area of specialisation.

The biggest issue is that pProduct sales, or product conversations, introduce complexity….that is the thing to move away from wherever possible, and especially in the formative stages of a client relationship.  So the actual challenge in managing the transition from product-focussed solutions to advice-based relationships is to focus on removing complexity from clients lives.

So let’s use a common scenario from the area of financial advice which seems to struggle most with this issue  to explain it:

Many advisers think putting in place an insurance policy to cover the loss of a business key person  removes complexity.  It doesn’t do that for most people. It actually 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.

The product solution in itself creates more confusion and complexity.  What advisers must be mindful of is moving the product solution from being the focus of the engagement to being an incidental element in the engagement.

All financial advisers provide advice during the engagement however the advice component of the process is rarely valued anywhere nearly as highly as the product solution by the advisers themselves, simply because they usually get paid by the product and not for the advice component.  As a result many advisers often believe that the value they create is 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 financial advisers providing more holistic solutions and advice, especially those in the full financial planning arena or in specialty disciplines, usually do not feel that this observation applies to them.  They ONLY provide advice, right?

How does that advice look to a client?

Financial Advice Complexity

The advice looks like a product more often than not.

It is so jargon-filled and technical that it often ceases to actually look and feel like advice…it feels more like a thesis.

This does not reduce or remove complexity from clients lives.   In the same vein as the product-focused adviser we are simply introducing new concepts that typical consumers do not 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.

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 simplify those complex areas and then motivate a client to do something different which is valuable.

Making the transition from product-focussed practitioner or clever technician to a life-changing-coach is the advisers greatest challenge, and the key to achieving that is to simplify everything possible for the client.

You might also be interested in this related article:

How To Write A More Effective Client Report
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