My Answer to the “Value” Question
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Back in the good old days when I used to give talks before a live audience, I developed a foolproof way to ensure what I was speaking about was of interest to participants.
As part of the registration process, each person was asked to respond to a series of questions, like these:
What’s the question you dread getting the most from prospects?
What’s your biggest barrier to converting prospects into clients?
What’s the one topic you want to be sure is covered in Dan’s presentation?
Consistently, advisors responded that they had difficulty explaining how the value of their services justified their fee.
My approach to the “value” issue
In my articles, I have taken a consistent position on the “value” issue: Don’t explain your value or justify your fee unless you are expressly asked.
If you are asked, don’t try to persuade others that you add value or that your fee is worth it. Instead, describe your services and how you compute your fee and then say: “Only you can determine if I’m worth what you will be paying me. Do you need any more information about what I do or how I charge?”
Advisors assume that they add value to all prospects, but that’s not the case. You add much more value for an unsophisticated widow than to a hedge fund manager who wants to invest her own portfolio in index funds.
The lack of humility
No one asks whether your advice might cause harm. I have had personal experience and have seen examples when “negative value” occurred. It’s almost always due to a lack of humility.
In my recent five-part series about my late partner, Emery Kertesz, I explained how two advisors I consulted recommended against putting up the capital to fund a new business with him. I don’t fault them. Their advice was reasonable under the circumstances.
In retrospect, it was also dead wrong.
Had I listened to them, I would have missed out on an opportunity that made me financially independent and permitted me to work only for clients who I greatly admire and deeply respect. It was the single best financial decision I ever made.
Their negative value was because of a lack of curiosity and a lack of humility.
If they were curious, they would have probed my reasons for wanting to make the investment and why my wife and I had such a special feeling about Emery. They would have asked how we assessed the risk of the investment and whether we were comfortable with that level of risk.
They would have asked thought provoking questions like: “If you knew there was a 90% chance of the loss of your entire investment, and a 10% chance the investment would exceed your fondest expectations, would you do it?”
Instead, they looked at the projections, considered Emery’s health issues, and gave the investment an unequivocal thumbs down.
Why is humility in short supply? You’re paid handsomely to give advice. Who wants an advisor who lacks confidence?
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How to Relate to Anyone
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Having humility fosters many of the traits critical to being a successful advisor: trust, engagement and strategic thinking. It may even correlate positively with better mental and physical health.
You can find an excellent discussion of other positive traits of humble people here.
Even the most skilled financial advisor is impaired by factors that are unknowable. You don’t know the future direction of the stock market, when your clients will die or what their marginal tax rate will be when they are required to start taking required minimum distributions.
Instead of projecting false confidence of the all-knowing advisor, follow the humble examples of Warren Buffett, Albert Einstein, Gandhi, Mandela and Mother Theresa.
No one ever asked if they added negative value.
Dan trains executives and employees in the lessons based on the research of his latest book, Ask: How to Relate to Anyone. His online video course, Ask: Increase Your Sales. Deepen Your Relationships, is in production.