Many people in the financial services industry believe that financial planners sell advice, however this is simply not true. They charge for advice but this is not what they sell. The notion of selling advice is as irrelevant to planners as selling an hourly rate is to accountants. There must always be a ‘value gap’ between what is sold and what is charged for, as in the case of restaurants that obviously charge for food and drink but less obviously sell…’enjoyable experiences’.
What financial planners sell is not what they do, it is what they get done…for clients. And what financial planners get done should not be measured in terms of higher investment performance or lower prices for products such as insurances…although both of these benefits are of course most welcome to clients. What the financial planner is supposed to ‘get done’, or if you like what the planner sells, is the ‘avoidance of serious problems’ (involving great personal hardship and financial loss) and the ‘achievement of significant progress’ (involving great personal satisfaction and financial success). These two items for sale can be thought of as ‘brakes’ and ‘accelerators’ in the lives of people, arranged according to ‘personal needs’ by the financial planner.
The ‘avoidance of serious problems’ (or ‘freedom from pain’) covers personal issues such as ill health or serious sickness, untimely death, loss of earning capacity, living with too much debt and paying more tax than is legally required, etc. These issues in turn relate to insurances, such as life, income protection, trauma, and also matters such as control of household expenditure, tax minimisation and estate planning.
The ‘achievement of significant progress’ includes aspirations such as moving to a nicer home, perhaps owning a holiday home, providing kids with better education, being able to take holidays, improving the present home in various ways, arranging surgery to improve personal appearance…and the critical area of lifestyle in retirement. There are many more ‘desires’ to consider in this area, and objectives such as those listed are of course driven financially by superannuation, investments, savings and, again, more prudent control of household expenditure.
The next question concerns how the planner should sell these brakes and accelerators, and the answer is most certainly not the ‘fact find’! There are four stages the planner must manage, however these stages are preceded by the ability of the planner to sell himself. This means that he must genuinely be perceived by prospects, clients and associates as being pleasant, respectful and purposeful. A pleasant disposition involves obvious qualities such as personal presentation, punctuality, warmth, courtesy and a professional demeanour (the latter means that the planner is nice but also ‘on a mission’). To be respectful means acknowledging that a prospect is already dealing with one or more ‘service providers’, all of whom are likely to be seen as being ‘fine’, and the same applies to a partially developed client that the planner wants to do more for…all of which means that the planner will not aim to displace the current service providers, but rather to offer information that he feels will be of great interest. And to be purposeful involves making it clear that you have something of great importance to address, and of course you do…in the two key areas of life mentioned earlier. On this point I believe that it is necessary for the adviser to explain that he will aim to create ‘the third result’ for the client or prospect. The first result equals what the client has now, the second result equals a marginal improvement on what the client has now…and the third result equals a much better result than the client has now. Obviously, the first and second results hold no interest to clients at all. I am confident that most clients can achieve ‘much better results’ than they enjoy now! When the planner has sold himself, there are four selling stages to cover: THEM, YOU, ME & US…
• THEM! ‘Them’ refers to the community at large, as made up by people such as the person the planner is talking to. The aim at this point is for the planner to explain as graphically as possible what is happening in the community…in the two areas of problems and progress. In more specific terms the planner must divulge information concerning how only a few people in the community do well in both areas…and how most people fare poorly or very badly. The latter information should include the negative forms of impact on the lives of people who fail to do what must be done. Most people know a little about both areas but never enough, and if they did then financial planners would not be needed. By focusing on ‘them’ to start with, the planner can be sure that the person being served will soon be thinking ‘where do I/we stand in relation to the two areas covered?’ This initial stage in the selling process should ‘enlighten’ the client or prospect and create focus on the issue and concern
• YOU. After the ‘enlightening’ stage concerning THEM, the planner must focus attention on the person being served…hence the reference to ‘you’. This does not involve the official ‘fact find’ process, instead it involves what can be termed the informal ‘fact feeling’ stage, at which time the client or prospect is invited to indicate where they ‘feel’ they stand in relation to the two key areas of interest – namely the ‘avoidance of problems’ and the ‘achievement of progress’. A simple questionnaire is used by the planner to engage the client or prospect at this point. This device is called ‘Feelings on Finance’ and is very easy for people to complete, taking no more than perhaps 1 – 2 minutes! The questionnaire (which I present at seminars) involves just a few questions and when completed it becomes obvious that the client is by no means certain of where he stands in relation to both key areas. This process has the potential to ‘frighten’ people, in a constructive way, concerning what they really need to do…remembering that healthy fear is perhaps the greatest motivator of people. All of this is a valuable seed to sow concerning the need for the ‘fact find’…later in the process
• ME. The planner then briefly explains that the ‘fact find’ is a necessary process to determine actual areas of need, opportunity, etc., and then explains how the problems and progress issues can be successfully addressed by him (the ‘me’ factor)…in simple ways that will please the client or prospect. And part of what will please the client or prospect is that the cost of doing what must be done may not exceed the person’s current level of expenditure! The planner should explain that the ‘cost’ issue will be addressed later, and what is meant by this is that if more cost is involved to do what must be done, then ‘redirection’ of expenditure may be called for. If the issue of cost is not addressed at this early stage, then there is a good chance that the client or prospect will not be fully focused on the discussion…because they may be convinced that they cannot afford additional expenditure. At this point the planner must present the menu, not the recipe…meaning that ‘ideas’ are discussed, not ‘detail’. ‘Ideas’ relate to the potential use of insurances, investments, superannuation, etc., while ‘detail’ concerns specific insurance policies, specific investment strategies, specific super steps and so forth. The ‘me’ stage does not involve specific advice for the client, it involves potential ‘ways’ to do what must be done, which gives the planner a professional opportunity to merchandise his range of knowledge and experience. This ‘display’ of ideas will impress the client that he or she is in safe hands, and that maybe, just maybe, there is the chance to do the right thing without great additional cost
• US. At this point the planner presents a plan of action for moving forward together (hence the ‘us’ factor), which will involve accessing information and completing the ‘fact find’ project, etc. However, because of the gradual impact of the previous 3 stages, the client will now face the fact find challenge with the right attitude and motivation. When the planner has arranged for information to be compiled he can prepare a plan that is a mixture of ideas, options, advice and ‘product’…all of which should represent a gradual path towards satisfaction in the two areas of ‘need’. And it is at this point that it may be necessary for the planner to invite the client to consider redirection of expenditure, in the event that the solution appears too difficult to manage financially
The final stage must of course revisit what was said at the start and through other stages, concerning what was needed in both areas. In other words the sale of a plan must never become a clinical process. And of course the fees to be charged by the planner can now be seen in the same light as the price of a book – the last thing to be considered. When people want to buy a book they do not enter bookstores and say ‘have you got any $10 thrillers?’ The purchase of a book is predicated on a simple and powerful premise: pleasure first…price last. Surely, financial planning involves the same human process: sell the pleasure of achievement first…and fees last.
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