Ask Brad: Adding Client Value in a Way Few Advisors Do
This is the latest installment of a regular column to answer questions from advisors who are considering transitioning to an RIA model. To see Brad’s previous articles, click here. To submit your question, please email Brad here.
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I talk to a lot of advisors. Part of that involves learning about their practice: their value proposition, what services they offer, and how they manage investments.
That feedback results in an unscientific survey on the value-adds most advisory firms offer their clients. Or the value-adds not being offered.
While I am not a practice management guru, an experience I had this past year warrants sharing. It led to adding value to your clients in a way few of you do.
Backstory: Some of the rain gutters on my house need replacement. Knowing absolutely nothing about gutters, I dreaded having to complete such a task.
My initial “does anyone know a good gutter guy” group text to my fellow homeowner friends proved futile. Next was a Google search. There were many seemingly indistinguishable options. I crossed my fingers, picked one, and scheduled a visit for an estimate.
The gentlemen arrived as scheduled, looked around, and explained which gutters needed replacement. So far, so good, I guess. Maybe this task won’t be such a headache after all.
Then he hit me with it.
Him: “The wood trim behind some of the gutter sections needs replacement as well.”
Me: “Ugh, how much does that add to the price?”
Him: “Not sure, I don’t do the wood replacement myself. You need a carpenter for that.”
Me: “Ok, I presume you help coordinate that as part of the overall job?”
Him: “Nope, you gotta do that on your own.”
Me (feeling further demoralized as I don’t know a carpenter guy either): “So the carpenter guy takes down the old gutters and then replaces the wood. I then schedule you to come back to do your part?”
Him: “No, you can’t schedule the carpenter guy until you schedule me first to come out and take the old gutters down. Then the carpenter guy can come out and do the wood.”
Me: (now contemplating how fun having to coordinate those schedules will be): “So once the wood guy is done, then I schedule you to come back out to put up the new gutters?”
Him: “No, you need a painter guy to come to paint the new wood first.”
Me: “Wait, so neither the carpenter nor you do the painting. I need a separate painter for that?”
Him: “Yes, then you call me to put up the new gutters.”
Me: “Can’t I just pay you to coordinate that for me? You likely know carpenters and painters better than I do. I’ll gladly pay you to quarterback the entire project.”
Him: “No, I don’t do that. I only do the gutters.”
Months later, I still have not completed any of this!
There are some things in life I don’t mind doing and plenty of things I will gladly pay someone else to do.
It’s not that I’m “too good” to perform such tasks; I simply don’t want to do them.
I would gladly have paid the gutter guy a premium to coordinate it all for me.
Now consider the value and services you provide to your clients.
Do you ever talk to them about
- their life insurance?
- obtaining or refinancing a mortgage?
- disability insurance?
- creating a will or power of attorney?
- buying or selling a house?
Assume you have a client who could benefit from refinancing their mortgage to a lower rate. Yes, I realize this is not the best example with interest rates rising, but the example is valid.
You provide that client with value by explaining how refinancing works, how they could save money in interest every month, etc.
How likely is it, though, that the client will follow through on the refinancing?
They’ll have to find a mortgage provider to use.
They’ll have to schedule a time to talk to them.
They’ll have to perform multiple steps along the way.
Inertia kills progress.
What if, instead, you said, “I know a wonderful mortgage broker. I will coordinate a time for you, the mortgage broker, and myself to meet in my office to go over the process and get everything started. I’ve made a simple one-page checklist of the documents you need to bring with you. Other than that, all you must do is show up. I will coordinate the rest.”
Removing inertia from the equation equals value creation.
You can apply the same approach to helping someone obtain life insurance, disability insurance, or getting their will and estate plan in place.
If you’d rather not have your clients question your fees, make their financial lives so amazingly easier that they never ponder it.
Build a vetted network of insurance providers, real estate brokers, mortgage brokers, estate attorneys, etc. Don’t just pass their names along to your clients; coordinate the whole process for them. Make it as easy as possible for your clients.
I would have gladly paid the gutter guy a healthy premium if he’d coordinated the whole process. Your clients will gladly pay your fees if you’ve made their financial lives equally as pleasant.
Brad Wales is the founder of Transition To RIA, a consulting firm uniquely focused on helping established financial advisors understand everything there is to know about WHY and HOW to transition their practice to the RIA model. Brad utilizes his nearly 20 years of industry experience, including direct RIA related roles in compliance, finance and business development to provide independent advice regarding how advisors can benefit from the advantages of the RIA model.