The Four Value Propositions – Part Three…

The “Financial Carer”

Good doctors tend to focus on preventing disease as much as treating it.

This means understanding the patient as well as the diseases that might (or might not) be afflicting them.

Similar too for financial advisers.

The clients who will pay for a Carer proposition consider their financial lives as complex.

The drivers of the client’s complexity is their lack of time, their lack of objectivity, their lack of experience, their lack of skill, their lack of desire, or their lack of understanding in areas of tax law, investment theory, cashflow, risk management.

Yes, the client’s puchasing either the Supplier or the Specialist proposition also consider themselves facing  financial complexities which alone they can’t overcome, but the SOURCE and ACCEPTANCE of the Carer Client’s perceived complexity is behavioural rather than circumstantial.

For clients seeking the Supplier or Specialist proposition, once they believe the circumstances driving their need for advice are treated or passed, they don’t perceive the value in on-going financial advice. However, the client seeking the Carer proposition acknowledges their on-going complexities are driven by their on-going inabilities, desires, behaviours, and/or lack of time.

This third proposition – the Carer Proposition – will become the most prolific proposition of future advisory firms.

But few of today’s advisory firms have built consistent, methodical and specific engagement, pricing, client management techniques required to consistently demonstrate value, year in year out in terms the Carer Client understands.

As markets endlessly gyrate, as legislation continually is tinkered and/or hacked, as financial product manufacturers strive for the latest and greatest, the Carer Client acknowledges their unpreparedness to self-direct their own financial lives as well as understanding their own contributing behaviours that puts them at odds at best achieving the financial outcomes most meaningful for them and those important to them.

Outcomes for Carer Clients are NOT retirement dates with retirement amounts. Outcomes are not buying the best performing investment fund, insurance product or tax ruling. These are all essential, “tickets to the game”, like the sharp scalpel used by the surgeons. But by themselves, these outcomes are less important to the Carer Client as the outcomes they seek in retirement or the options they hope for in their business or the choices they strive to deliver to those important to them.

Discussions about outcomes need to be very specific, very detailed (we refer to them as “signature” outcomes) and idiosyncratic to each client (and to each partner within a client partnership or family).

Carer clients seek and value on-going accountability from their advisers. They seek project management to ‘pull’ all aspects together (like a good builder) when required. They seek strategic management when “disease prevention” is more valuable advice than any “product intervention”.

Most importantly they seek confidence from a TEAM of advisers that understand them financially almost better than they understand themselves financially.

As Phil Burke reminded me the other day “clients want to know how much you care more than how much you know”.

Very true particularly for Carer clients.

What do you think?

One Comment

  1. Posted May 15, 2012 at 11:36 am | Permalink

    While it will take a major change in mindset, I agree with Jim that promoting the ‘carer’ role for advisers could become their most prolific proposition.

    In this role, advisers will become more facilitators than directors. They will be less concerned with immediate ‘cures’ (read investment decisions) and more with fostering informed commitment by their clients to the key assumptions that underpin the illustration of their current path.

    This requires the right skills to enable clients to see the trade-offs they need to make. For example, risk tolerance assessment is mostly wrongly used to prescribe asset allocations rather than to explore comfort and arrive at client ownership of the inevitable trade-off between risk and return.

    Another example is personal longevity, where properly trained advisers can help clients make the complex tradeoffs involved in many time-related decisions (health and cost of living, aged care and engagement with their families, equity in property, effective use of remaining human capital. etc). Currently most advisers use the (incorrect) life tables or some personal derivative of them as a time frame and waste the opportunity for very rich engagement with their clients.

    Correctly managed, the carer role is very low risk and capable of yielding very high attachment with and referrals from clients. It should significantly amplify client benefits and contain many of the costs of managing clients, thereby achieving a high value outcome for both parties. It is an essential requirement of a successful long-term fee-for-service business.

    Promoting the ‘carer’ role as a key attribute of professional advisers will also help the profession to raise its image. As the IMF recently pointed out, we have a steadily ageing community which must become more dependent on its own resources and less on increasingly financially constrained governments. Advisers have the opportunity to play a key role in helping the community to deal with this challenge.

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  1. […] proposition is similar to the Carer proposition where the clients recognise their issues as complex and they also recognise the causes of their […]

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