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Getting Your Future of Financial Advice Right

Unless you are a purely risk-based adviser, the latest round of updates to the Future of Financial Advice reforms, in additional to the Financial Planning Association’s remuneration policy, ensure that come 1 st July 2012, the majority of financial advisers will be operating on a fee-for-service basis.

While these changes will mean a greater level of transparency, clarity, and trust for clients, the fee-for-service and FOFA changes also mean that as a financial planner the way that you and your practice goes about business also has to change – and now more than ever, you need to ensure that your business is smart, efficient, and effective at what it does.

Yet when it comes to building a successful and profitable fee-for-service business, and one that has the right foundation for long term and sustainable growth, there is a significant lack of quality information or misinformation about what financial advisers need to do to not just be ready, but to make the most of the opportunities that the upcoming reforms present.

And take it from me, as someone who owns and operates what is effectively a fee-for-service business, there are plenty of opportunities that present themselves with fee-for-service. Because when you strip away all the other decorations, jingles, and catchphrases, at its core, fee-for-service is about one thing – Getting your clients to pay for your services .

What this means is that you have all the opportunity and all the flexibility (within legal and ethical boundaries) to create any service or offer you want – as long as your clients are happy to pay for it .

It could be a small service. It could be a complex and complicated service. It could be something that everybody wants, or it could be a niche offering a few people want, but are willing to pay a premium for it. It could be simple, it could be quick, it could be any number of things, and this is the opportunity that fee-for-service provides. The world is your oyster, and the only question is, “What type of pearl would you like to harvest?”

Which brings us back to what it takes to build a successful and profitable fee-for-service business, and if your first response was, “developing a value proposition” , then unfortunately, this is where some of us have been misinformed on where to start.

This isn’t to say that having a value proposition isn’t important, because it is a very critical piece of the puzzle. But if the core of fee-for-service is about getting your clients to pay for your services, then even before you develop a value proposition, you need to know very clearly – “What exactly is it that my clients want?” – before you can start to develop your value proposition.

And with that in mind, these are the 7 critical steps you need to follow in order to build a successful and profitable fee-for-service business:

•  Know Thyself

As Sun Tzu says in the Art of War, “If you know the enemy and know yourself you need not fear the results of a hundred battles.” Before you even start down the fee-for-service journey you need to be clear about what, either as a planner or as a business owner, you want to achieve. What are your objectives? What is the end game? What defines you and your practice and gives you a competitive or defining edge? What allows you to understand your clients better? What special quality do you bring to the equation?

•  Understand Your Customer

Who are the clients that are right for you and who can help you and your business grow? What type of clients do you connect with? What do these types of clients want from you in terms of a service? What do they value and what are they willing to pay for?

•  Develop Your Proposition

Once you understand what you want to achieve and what your customers want, you then have what you need to develop your value proposition and service offering. Remember that your proposition can take many forms – it can be a full service offering, or it could be something as simple as a newsletter.

The key questions you need to answer are 1) what is it that you want to offer? And 2) what are your clients willing to pay for? Find something that ticks both the boxes and you are most of the way there.

•  Set Up Your Promotion

It’s no good having the best proposition or offering in the world if no one knows about it. How are you going to promote your business and ensure that your clients, both existing and prospective, know what you have to offer?

Look at how your clients behave and how they like to communicate and take in information. Find out what works and make sure that you have a plan in place to promote and market your services.

•  Establish And Enhance Your Service Delivery

So you have customers who are willing to pay, but can you actually make a profit on the service? This is where your ability to deliver is everything. Make sure that your services are in place; that you have the right tools and processes to get the job done as effectively, efficiently, and consistently as possible. In doing so, not only will you meet the expectations of your clients, but you will also maximise the profitability of your business.

•  Build The Right Team For The Job

In a services business, having the right people doing the right things in the right roles is everything. Build up a team that can not only do the job, but who also believe in the direction of the business and in what they are doing. Not only will you get much greater dedication and performance, it will also show through to your clients who will end up respecting and trusting you more.

•  Structure Your Fees For Growth

And with all that in place, the last thing to do is to find the right structure and pricing for your fees that walk the careful juggling act between reflecting and rewarding the value and benefit of your services, building up capacity for growth, but also creating affordability for your clients.

It’s not a simple tightrope to cross, but then again, that’s the challenge of business – to find that sweet spot when it all comes together. And this is only something that you will find out with a bit of experience and trial and error.

And with these 7 key steps, you have the fundamentals you need to build for yourself a fee-for-service business that is not only self-sufficient and independent of commissions, volume payments, shelf-fees, etc., but has the right foundation to succeed, profit, and grow in the new Future of Financial Advice world.

Lap-Tin Tsun is the Managing Director of E&W Strategic Partners, a boutique consulting and training firm that specialises in assisting financial planning businesses in transitioning to fee-for-service. E&W Strategic Partners have a range of fee-for-service books and training workshops available. For more information, please visit the E&W Strategic Partners website.


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