An article by James Fennessy in the Australian Banking and Finance magazine on March 10, 2011 highlights a key challenge for financial advisors. That is delivering value to their clients and getting paid for it. How do advisors demonstrate the trust in their advice to get paid for it? The article points out that the cost of a financial plan is around $2500 however consumers only value them at $300. This is a large gap. The other key point that the article does not say is that based on Dalbar studies investors do far worse when they self manage their investments. So, can investors want to have their cake and it too? So, financial planning does need to get to the place where there is trust and value offered. Importantly, if investors want the proper service they will have to pay a fair fee. No different than going to any other professional.
The starting point for this change is with the advisors offering a service that creates greater longer term value and trust. They will need to have deeper conversations that address the clients life and values. The service must go beyond investments as that is a commodity. The advisor must learn to build a customized experience for each client based on the clients unique personality. The client must be recognized and valued for who they are, and not their money. Importantly, the planning process must allow for the client to be guided through it so they are personally involved in every step. Then the value will be felt and even more trust developed. It is now up to the advisors to be trained to do this. Such training is more soft skills related. Research does show this works but advisors have to trust the process. These principles are at the core of the Financial DNA Certified Wealth Mentor Program.