Pricing key to growth in advice: consultant
“Nothing can make you more productive...than proper professional pricing,” a well-known advice consultant has said in a recent webinar exploring the importance of value-pricing in boosting financial advice businesses.
In the webinar yesterday, managing director at Certainty Advice Group Jim Stackpool said advisers looking to drive business productivity and build adviser worth must price their advice platform according to three key areas of business value.
Advisers should be pricing: the access that a client has to financial expertise; the services delivered by the adviser; and the enduring relationship and value that the adviser will provide moving forward, Mr Stackpool said.
Value-pricing is crucial to building client recognition of adviser worth, he added.
“A lot of advisers have issues with their clients not being able to ‘afford’ financial advice. If that were true there would be no quality goods market, no market for private schools or for high-end cars," Mr Stackpool said.
“It’s not about making advice affordable; it’s about making it valuable."
Mr Stackpool says advisers should be adding different levels of mark-ups to their minimum fees to ensure they are being remunerated properly for helping client's achieve different types of financial goals.
“For clients to achieve the outcome that your expertise can provide, how significant or valuable is it to them? There are four levels of value that advisers provide that can be charged extra for - provided fees are professional and you’re not dialing them up to see how much the koala can bear," Mr Stackpool said.
“If you’re helping a client’s kids get into a school they have been working towards, or helping people move parents into a granny flat - you should be charging extra for that. I call this ‘worry money’ - you get paid to do the worrying to make sure that the client’s objectives are achieved.
“Another level of value you should be marking up is ‘unique value’. This is the ‘old dog’s new tricks money’ - where a client’s behaviour has to be changed in order to achieve a financial outcome.
“It’s not simply about putting strategies in place. If you have a client who is terrible at saving and who needs to implement strict savings habits, you need to charge extra for the trouble it’s going to take you to keep that client on track, otherwise you’re going to lose money moving forward.”
“Personality value is the fourth level that advisers should be marking up on top of minimum fees. This is for clients with extremely erratic behaviours, who are terribly time poor or atrocious with numbers. This is for clients who you definitely can provide value to, but who are extremely difficult to work with,” Mr Stackpool said.
“Nothing can make your advisory firm more productive than proper professional pricing– it's not software, it's not tools, it's not more staff; it's your approach to pricing."
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