“Price is what you pay. Value is what you get"
Given that this quote comes from no less a person than Warren Buffett, we should pay attention as it appears to have relevance for NZ Financial Advisers coming to terms with the new regulatory environment. Whether comfortable with the fact or not, the truth is that NZ financial advisers – particularly AFAs - are selling advice. The advice may have a product-based solution, but the suggestion to invest, buy, or otherwise exchange consideration to achieve a specific financial outcome is driven by the advice provided.
So with Warren Buffett’s quote in mind, how does a New Zealand financial adviser transmit to the client the value of what is being provided?
The price is easy to identify; the value requires more attention and thought.
In many respects, our experience of regulation in NZ is still in the early stages, and we may perhaps gain some insights into the issue with a view from overseas where regulation has evolved based on similar considerations facing the New Zealand financial services industry.
The advent of the Retail Distribution Review in the U.K. has caused advisers to review their proposition to their clients and to seek ways of articulating and communicating the value that advisers bring to the relationship.
The heart of any such conversation needs robust and comprehensive research to stimulate useful exchanges and to provide validity for views expressed.
So in this instance, Vanguard Asset Management, in conjunction with Adviser Impact UK, has produced research on the Economics of Loyalty, an examination of client attitudes and responses to financial advisers.
The full text of the paper, “Defining and Articulating Your Value” can be read here.
In essence, the paper seeks to establish the clients’ view of value and how this manifests itself in the relationship with the adviser.
The content resonated with me as there is a clear link identified between engaging with a client and the perceived value which the adviser provides.
But enough from me, please take a few minutes to go through the article and contemplate how the message may be relevant to your business.