THE VALUE OF ADVICE
IT WAS NEVER ABOUT THE PRODUCT
Lawrence Cook, Head of UK Intermediary Distribution at Sanlam, takes a closer look at what your clients really value.
Whether you are a financial planner, adviser, investment manager or provider of any intangible service such as law, the training and qualifications you garnered over many years didn’t properly prepare you to understand the fundamental truth that the transaction you provide is of little or no interest to clients and is not what they want to pay you for anyway. You might be able to calculate a Sharpe ratio; well done. You might think you have a very good insight into investment markets and can make good judgements about timing of asset allocations in your client portfolios; good luck to you. Technical matters and all the administration that goes with it are all secondary to what the client is actually interested in of course. Client interest lies in their own lives and what they want to achieve or perhaps avoid. The fact that they might recognise they need your service isn’t something they want to celebrate, it is just a matter of needs must. In other words the buying of intangible professional services is not a pleasure purchase. During lockdown I decided to upgrade 16
my wireless speakers in the home so I can listen to my music and podcasts in any room I choose. Now that was a pure pleasure purchase. The need at some point to have my pension drawdown affairs sorted out will not be a pleasure purchase. None of this means the services we provide are inconsequential; quite the reverse. We should remind ourselves that the product or transaction that we deliver, often within a regulatory ambit, is not what clients are actually interested in. It is their lifestyle and all that goes with it they are concerned about. Recently, I have spent time working with financial advice businesses and discretionary investment managers helping them to focus on what really matters to clients and turning that into commercial success. The essential truth running through it all has been a constant for as long as I can remember – focus on the client need. Some years ago in discussions with law firms, they shared some frustrations with me around the profitability of the private client operations within their businesses. Both firms were in the
