How to take the "R" out of FREE

 by Tony Vidler.

Traditionally the financial services sector has been almost entirely remunerated via commission, and many advisers are now grappling with the basic question of "how" to make the transition - even if only in their minds - from working solely on commissions to charging clients directly for advice and/or service.  

Consumers perceived rightly or wrongly that financial advice was "free", and the struggle now is how to take the "R" out of that, and establish that advice deserves a fee.  There are basically just 5 steps to being able to do that successfully.

In order to successfully value the advice component (in any line of work) there is the essential requirement to be able to define what it is you do that benefits the client. What precisely is your valuable contribution?  

 

Step 1 is a fundamental element that is often the real barrier to being able to successfully charge reasonable fees for expertise.  Or to put it plainly, the inability to explain easily what your expertise is, is the very thing that creates the awkwardness for many advisers.  

If one can be blunt, there is little real ability to put a fee on expertise if one cannot explain what the expertise is, and how that will benefit the person paying the bill.  Remember, value in a customer's mind is pretty much as simple as "benefits minus the costs", which is the clever way of understanding their key question: "what do I get for what I pay?"

So the first and most critical step is being able to explain simply what it is you do that warrants a fee being paid by a client.

Moving on to the actual steps of implementing fee's though, there are 4 more things that are "must do's":

• You have to initiate the discussion.  It cannot be avoided, and you cannot leave it to the client to ask the right questions - you must be proactive, confident of the value presented, and willing to be up-front.

•  You have to be totally transparent.  No trickery or magical playing with numbers.  No detailed fine print that obfuscates.  Provide your fees in a plain, easy-to-understand method.

• You have to put fees in context. Do not expect consumers to be able to work out whether your fees are reasonable compared to other choices, or how they relate to the benefits you provide to them.  This element is a little different to Step 1 - which was a general positioning of why you are worth paying at all.  Here, you must be able to personalize the value element for the client.  Having told them the cost, you must be able to explain the benefit to them in order to identify the value being created.

• You have to put it in writing.  Doing business on a handshake is fantastic, but to create lasting trust in a consumers mind, you must be willing to put it in writing for their safety.  This takes some of the "risk" out of the equation for them.  And of course, should there be problems in the future this is a critical element.  After all, in a dispute a verbal contract is not worth the paper it's printed on, is it?

By implementing these steps you will be able to move from the concept of providing FREE advice, to providing advice that is worth a FEE. 


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The 8 steps of a great sales script

 by Tony Vidler.

 One of the most under-rated tools for success in any sales-orientated job is "scripting"...actually writing down the words you are going to use - in advance - and thinking about how those words work together.

Unbelievably though most sales people seem to prefer to pick up a phone, or make a call on a prospective client, and basically just work it out on the fly. 

They say they want to sound "natural", or don't want to sound "canned"....and after a little role play I can often assure them that their natural and un-canned approach to a prospect certainly doesn't sound like a rehearsed spiel at all. 

It usually sounds more like a spluttering teenager hesitantly asking a shotgun-armed father if he can take his daughter out....

The same salespeople then ask for help with improving their conversion rates....improving the proportion of the people they talk to initially wanting to talk further with them.  But they want to be natural while doing it.

So why bother scripting out what you are hoping will sound natural and easy?  Well, it is so you can be natural and easy....while being effective.

In any presentation, whether it be over the phone to a stranger or in an auditorium of attentive acolytes, you will be far more relaxed and easy with your audience if you know precisely what you are going to say and do.  Practice really does make perfect in this regard...rehearsing and practicing to get the right words in the right order and with the right inflection and impact makes a massive difference to your conversion rate.  It follows of course that a big difference in that conversion rate means far more effective advertising and marketing spend, and a far healthier bottom line for your business.  And you annoy less people.

What goes into a good sales scripts?

1.  The clients name.

The one thing guaranteed to get someone's attention is their own name, and it is a basic courtesy.  Try and use it 2-3 times early in the script as it gets their full attention on what you are saying.  You are also being courteous and polite in doing so, which creates a positive impression.

2.  Pauses.

Especially when engaging with a prospective client on the phone and they have no non-verbal clues to help them, you have to give reasonably frequent pauses.  It is difficult for most people to follow a conversation with someone they do not know well when they can only hear them, so you have to slow down and give them time to process what you are saying.

3.  Tone.

The tone can in itself make or break any approach - we all know that.  Think beyond the obvious though - it isn't just about being friendly and professional, but where you put inflection on particular words, and how fluidly you move through what you want to say can also make a huge difference to how positively it is received.  And a light mildly humorous tone can be magic - if you (or your line of work) can carry that off.

4.  Brevity

Life's short. Keep it brief.  Make it as short as possible - but no shorter.  One of the real advantages of scripting and role-playing is that you can actively refine what you want to say to get that optimal balance of brief, but detailed enough, to get the point across.

5.  WIIFM.

Every prospective client has Radio-WIIFM playing in their own head the whole time you are talking to them.  What Is In It For Me?  That's the question in their minds that MUST be answered sufficiently for them to agree to go further with you.  It is at the core of your script.

6.  Minimal choices.  

Too many choices confuse people, and their instinct is to either find a middle ground or refuse to choose anything.  The simple act of providing many choices creates a barrier for many consumers - it all gets too hard.  If for instance you are asking for an appointment, then just give them a choice of 2 times.  If you don't provide any choices, and leave an open question for them to solve, it just becomes too hard as they have to think of too many variables.

7.  Ask.

Seems obvious, but you actually have to ask for what you want at some point.  Clearly it is not appropriate asking for what you want before you've gone through the previous steps, however you do actually have to ask for the order, or the next step, or the appointment, or whatever.  This doesn't have to be complicated - in fact you are more likely to be trusted if it isn't some cunning "closing technique" - just simple and open, asking for permission to go to the next step, is very effective.

8.  Back-up.
No matter how good and polished your script and you are, there will be people you are talking to where they haven't quite got it and are hesitating.  Usually when they are hesitating or non-committal - but haven't hung up on you or thrown you out - they are saying inside their own minds "you haven't convinced me yet".

You have to be prepared with a back-up...something which cuts straight to the heart of the WIIFM again and helps them understand what the benefit is to them of doing what you ask.  It is not "objection handling" of the old fashioned variety where you supposedly will cunningly maneuver the prospective client into saying "yes" to something they will later regret.  This is your best shot...your key proposition put into words that show them how they will gain from doing what you propose.

There will still be people who don't go with your recommendation - and for lots of good reasons that they don't want to share with you.  But if you do construct a great sales script, and rehearse and polish it, at least you won't lose good people just because they couldn't understand you or thought you a bumbling fool.

A great sales script is founded on elemental psychology and an acute understanding of what is likely to be happening in the other persons mind.  The right words, put together in the right order, and then said the right way, and all done with conviction and certainty make for success.


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Financial advice less beneficial than prostitution?

 by Tony Vidler.

The latest financial services regulation development in New Zealand has an interesting twist.

One has an immediate sense that somehow financial advisers have just swapped places with the prostitution business.

By that I do not suggest that now financial advisers are trading in sexual favours of course, or that sex-workers are offering financial advice. But which of them engages in acceptable business practices does appear to be shifting it seems.



You see, soliciting for sex on the street is a legal and regulated business activity in New Zealand. Clearly it is an acceptable business practice to regulatory decision makers, and no problems are caused to society at large from allowing those in the business to hawk their wares to unsuspecting passers-by. I am confident there will be rules prohibiting them from soliciting near schools or something (which would be quite ridiculous as I am confident their target market are not to be found in schools), but by and large they are allowed to ply their trade openly in the street. Fair enough I suppose, and good for them.

However, we have a new piece of proposed law (the Financial Markets Conduct Bill) which says soliciting for financial products is something which should be stopped.

It's an interesting contrast don't you think?

Without meaning to be disparaging in any way to sex-workers (who by all accounts are prospering in the regulated world), it would be fair to observe that their trade would set off alarm bells on more moral radar screens than, say, a chap wandering around offering life insurance. I have no doubt the wandering insurance sales person (if they still actually exist) will upset someone whilst going about their business. But then, there is a proportion of society who clearly subscribe to Big Brotherdom in most aspects and are able to move to immediate moral outrage and indignant huffing and puffing at the suggestion that some people don't care about carbon footprints either.

So we have a proposal which basically appears to want to banish "unsolicited offers" made by financial advisers.

But what is an unsolicited offer? Conceivably it is any offer to provide financial products or solutions which a consumer did not actively seek out.There's a problem in itself. In 22 years I could count on my hands the number of consumers who have apparently woken up one day and decided that was the ideal time to contact me and put in place a financial solution - unsolicited.

In financial services, where the benefits or the products are primarily intangible in the first instance, most consumers are not alert to the benefits of taking particular courses of action. To help consumers understand what their possible courses of action may be the financial services industry engages in a significant amount of advertising, marketing and - for lack of a better word - soliciting.

Advisers talk to people, and in a sense "hawk their wares". Just like most other businesses. Plumbers do it, and painters do it, and prostitutes too.

Why would it be that it is not acceptable for financial advisers to talk to people and offer their expertise, or products, or particular solutions?

In this country we have a recognised issue with low financial literacy across society; we have a recognised problem in under-insurance (and therefore over-reliance upon the state to put matters right); we have a looming issue with retirement funding for an aging demographic.

The proposed solution?

Don't let those who might be able to help address these issues actually go out proactively and talk to consumers.

It is, in a word, farcical.

Professional advisers are universally in favour of laws and regulation to protect consumers from the unscrupulous. We have those laws already in fact.

Suggesting that the country requires a further piece of law-mongering that will undermine the public participation in the use of financial services and financial products, and relegate an entire industry to a position where it has less ability to market itself than prostitutes have, is simply irresponsible.

Doing so suggests that financial advisers provide less benefit to society as a whole than the streetwalkers, which I am willing to contest.


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When is the best time for honesty?

by Tony Vidler.

I have found myself talking to several advisers recently about "disclosure" - not a scintillating topic, and one which I'd prefer to not talk about. There are many things far more interesting in life on which you can spend your time.

The disclosure talk has arisen though because it is still apparently confusing, and advisers continue to ask questions on what they actually have to do.  One thing I am sure about though, is it is not a good strategy to try and find a clever line that is just on the "right" side of the law (you hope), and then try to make the case later on that you are an honest person.  

Honesty in the advice relationship is there right at the beginning, or it is never there at all.

A quick recap on adviser disclosure, as a principle here in New Zealand.  Full disclosure applies to Authorised Financial Advisers only, and most are apparently meeting their requirements with a 2-tiered system.  They provide a Primary Disclosure Statement when first meeting with a client, which details qualifications and licensing status, and provides general information on how they might be remunerated and what conflicts of interest might arise.  Following the specific advice being determined for a client, they then provide their Secondary Disclosure Statement.  This secondary statement is where the bulk of the confusion lies, and where there is a tendency for some to still get it wrong I feel.

The rules are actually pretty straightforward.  The Secondary Disclosure Statement must (and these are highlighted pertinent points only): 

•  "set out the prescribed information clearly, concisely, and in a manner likely to bring the information to the attention of the client".  (surely there is no confusion as to what this means?)
• if charging a fee, then the adviser must specify the basis on which the fee will be charged, a reasonable estimate of what the fee is, and when the client must pay.
• provide details of financial interests and relationships that "a reasonable client would find reasonably likely to materially influence the adviser"
• provide "details of all remuneration....that the adviser.....has received, or will or may receive

Further guidance is provided by the regulator:  "the intent of the secondary disclosure document is to describe the specific nature.....you should do this clearly and concisely and in a manner that brings the required information to the attention of your client".

So with such abundance (and I think clear) guidance why would an adviser have a secondary disclosure statement that is generic, templated and holistic information that clearly is aimed at being provided en masse to anyone they deal with?

For example, statements provided following specific advice to a specific client say things like "I may charge you a fee, or I may charge you a commission.  There may be bonuses, and I might receive incentives.  There might be conflicts of interest, but maybe not....."

How would an adviser, let alone a reasonable client find this sort of statement to clear, concise and specific?  Clearly it isn't any of those things - it is not clear what is actually being charged; it is not clear what material influences are actually at work here in this piece of advice; it does not specifically draw the client's attention to conflicts of interest.

Perhaps it is because some advisers are confused over what their obligations are.  Perhaps it is because some advisers feel uncomfortable spelling out their cost or remuneration.

Whatever the reason for not providing specific disclosure at the appropriate time, I am reasonably sure such behaviour will be severely frowned upon by regulators.  It is also very highly likely that any disputes resolution or legal intervention in the future would place some weight upon the fact that the disclosure was not of an appropriate standard (perhaps bordering on misleading?  oooh, there's a nasty thought....).  It will be difficult for an adviser to make the case at that junction that they are in fact an honest person who was operating in a professionally transparent manner.

Most importantly though, how can it build trust in the adviser-client relationship if one is not willing to be direct, specific and transparent from the beginning?

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3 questions you must answer to define your Uniqueness

by Tony Vidler.

The difference between a good (but not spectacular) salesperson, and a truly magnificent salesperson is the ability to succinctly articulate what makes them special. 

This is often referred to as having a "Unique Selling Proposition", or USP.
 
A good USP is the thing that in a moment makes a potential customer think: "Aha! - I am interested in talking to YOU".

That moment can be the difference between merely making a living, or making a mint.

So how does one go about defining their USP?

Well, it's hard work. You have to think honestly about what makes you different, and how you deliver value, and then be able to capture that in a simple statement that people can get, or get intrigued by, in moments....it is not a 5 minute job to work out for most people.  In fact it is something that you might be constantly thinking about and working on for many many months.  

To get on track with defining your own USP there are just a few questions that you need to be able to answer.  So here are the questions you have to answer in order to distill the essence of what makes you special, and why somebody should deal with you.

1. What do I really do?

(Note:  not what are the mechanics or functions of my job, but what things do I achieve for others)

2. What am I genuinely passionate about? 

(Note: "passionate" is an over-used word, but think about what you would do for no financial reward (if you could), because you genuinely love doing it)

3. How does what I do, and what I am passionate about, combine to make a fantastic difference to another person?

(Note:  This is the toughest one to work out - and is the essence of a great USP)

Some good (but not GREAT) examples:

"what makes me unique is my ability to grasp complex technical information REALLY quickly, and provide practical simple solutions straight away that clients can benefit from."

"what makes me unique is my ability to positively influence people to change their thinking on how their financial future can be, and then help them make it happen the way they want it to."

"I am great at being able to to stay focused on the end goal for my clients, and to be able to adapt their plan for them as the world changes so they are always on track to achieve their big goals."

There is a common structure here in articulating the USP.   Identifying immediately that you are able to describe something different about you in comparison to others, focusing then  on the key function that you perform better than others, and then translating that into the core benefit for the client.

Simplistically, the formula for a great USP could be described as:

My brilliance + my passion = Your gain

a final example....

"I am the best in the business at taking complex financial problems onboard, and delivering simple solutions that work for my clients.  I make their financial issues easy for them to fix."

It can be very hard work distilling all that you know, and all that you can do, into a simple sound-bite that people can grab, and understand, in moments.  If you are able to though, you will find that more prospective clients engage you.


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