Defining the value of advice has never been more important
The term ‘value proposition’ is one financial advisers hear and read about frequently, and for many years now, the profession has been urged to do a better job of articulating the value of advice to consumers, in order to increase its uptake.
The mass exodus of advisers from the profession in recent years has created a massive supply side constraint – there simply aren’t enough advisers to meet even modest levels of demand – to the extent that many advisers are rushed off their feet without even trying.
But this is a false dawn, as advisers stare down three emerging disruptive forces:
- the slow but sure rise of robo advice and artificial intelligence
- the looming intergenerational wealth transfer, and
- the potential entry of large and new players into the advice space, as a result of the Quality of Advice Review (QAR).
In this context, it is imperative that advisers revisit their value propositions, to ensure they are aligned with their capabilities and target markets, and to ultimately ensure they can make their practice as ‘future proof’ as possible.
In this article, we will explore the concept of the value proposition as it pertains to financial advice. We will examine the client perspective on the aspects of advice they value most, and look at how advisers believe they need to deliver value. We will also provide practical tips on how advisers can construct and articulate their value proposition in a way that can help strengthen client relationships, make it easier to justify their fees, and make their practice more sustainable in an uncertain future.
What is a value proposition?
In simple terms, your value proposition is a statement of the value you provide, to whom, and how you do it uniquely and well. Put another way, why should clients choose you, and why should they pay your fees?
A strong value proposition should be:
- compelling and relevant to your target customers
- differentiated from your competitors, and
- supported by proof points.
Tied up in the concept of a value proposition is the idea that you can’t be all things to all people and expect to succeed – you need to have a clear idea about what customer segment you are serving and then align your entire offering to their needs.
An easy way to understand this concept is to consider brands like Aldi, Jetstar, and IKEA. They are all brands for whom low prices are central to their offer. But they also have a clear idea about what their customers value, and what they are prepared to trade off.
With IKEA, there are only a few store locations, and you need to build your own furniture.
There are generally long queues at the checkouts.
At Aldi you are buying ‘house brands’, there is less choice, and you have to pack your own bags and pay for a trolley (and return it to get your money back).
With Jetstar you have to pay extra for catering, checked baggage, or to choose a seat.
All these elements allow the price to consumers to be shaved to the bone.
To continue reading and receive CPD points, view the original article on AdviserVoice’s website.
