Building value in the age of the “robo-advisor”

In the UK and in Canada, the focus on advisor ‘value’ has taken center stage.  And, in both cases, regulation is playing a key role: RDR in the UK and CRM 2.0 in Canada.

I have to wonder why it takes a regulatory shift to cause our industry to get serious about defining and defending  value.  Isn’t it just good business to have a clearly defined and boldly communicated value proposition that gets your clients telling their friends about the experience?

Enter the “robo-advisor”.  It seems to me that increasingly automated, self-serve advisory services are a competitive threat that will have a similar impact to the regulatory changes referenced above.

The only way to fight this (inevitable) form of competition is with value.  Be better.  Deliver more.  Accept that not all clients need the level of value you can deliver and focus your efforts on the ones that do.

In fairness to the industry, measuring value is incredibly difficult. I don’t envy those who are trying to quantify value with respect to investment performance.  In this case, however, client perception matters a great deal.

Not long ago, we partnered with Vanguard UK to write a report that examined advisor value through the eyes of clients and found that we could identify clients who were receiving very high value based on a composite of responses to three questions:

  1. To what extent does your advisor add value above and beyond investment returns/market performance?
  2. How would you describe the value that you receive from your advisor, relative to the fees paid?
  3. How valuable do you consider the advice you receive from your advisor in reaching your most important goals.

On that basis, the composite UK score was 73 out of 100, a result we called ‘relatively strong, with room for improvement’ (not unlike my the school report cards of my youth).

But the real question is what do we do about it?  This chart shows a few of the actions that were associated with high value – a starting point, if you will, for driving true value.

 3 Ways for Adivsors to Build Unique Value

Action Tactics Consider….
Define your value Position yourself as a trusted advisor, at the center of your clients’ network of professional advisors Creating a visual representation of your team, which includes the professionals with whom you work.  They are your extended team and a part of the total value you bring to client relationships.  You are the hub; they are the spokes.
Lay a strong service foundation with clearly articulated service standards. Ensure you can clearly explain exactly what each client will receive, by segment.  Service standards might include frequency of contact and education, appreciation
Communicate your value Create a service agreement that outlines what clients can expect Clearly documenting exactly what clients can expect and reviewing that at least annually so you can reinforce what has been delivered.
Reinforce credentials and expertise as part of your positioning Taking the time to help clients understand your credentials, what they mean and how they are achieved
Measure your value Gather client feedback consistently Implementing a process to gather feedback from clients, such as a client survey or advisory board.  Assess satisfaction, loyalty, expectations, needs and interests.


To access the full report go to: Measuring Advisor Value in a Fee-Based World.






, , ,

No comments yet.

Leave a Reply

Powered by WordPress. Designed by Woo Themes