23rd October 2013

Aegon: So why do clients pay for your service?

RDR has created many myths and these continue as we adapt to the post RDR landscape. Many felt adviser numbers would fall, restricted would be the new black and that consumers would never pay for advice.

Myths become legend and can, if unchallenged, become accepted fact. The best way to dispel a myth is to manage by fact and ask people what they feel and believe. NMG consulting has done just this in its latest Investor census which monitors consumer attitudes to the RDR and the impact the reforms are having on consumer behaviour. It’s based its analysis on online interviews conducted in April with 1,000 mass market and high net worth investors holding at least £10,000 in investable assets. The sample includes roughly the same amount of advised clients and non-advised consumers.

 It’s worth considering some of the key findings:

• 98% said they’d continue to receive advice.
• 80% of those who would continue to seek advice want it to be independent.
• The majority of consumers felt that the recommendation report and implementation were the key parts of the advice process worth paying for.
• 35% of clients would prefer to pay their adviser direct.
• 17% of prospective clients would be most likely to ask to have it deducted from their investment.

While these are positive findings, the two key behavioural findings struck me most:

• Consumers are now more confident that advisers are working in their best interests.
• A large percentage of consumers said that they’d always do their own internet research before seeing an adviser and only seek a face to face meeting for more complex issues, choosing to handle the simpler investments themselves.

This is both a positive and a negative. It’s good news that the perception of our profession is changing for the better. But it’s a challenge that new technology and consumer behaviour is making it harder for the advisory profession to deliver a proposition that clients perceive as offering real value and which they’re happy to pay for.
 

The psychology of consumer buying habits is fascinating, but service providers in any profession normally find that if they deliver on the following five key components, their existing and prospective clients are more likely, and happier, to pay for their service:

• Speed and convenience - how do you provide an outcome quickly and make it convenient?
• Add value - what can you do for clients that they can’t do themselves?
• A positive experience - how do you deliver an awesome customer experience?
• Differentiate - what makes you different from other advisers? Are you market leading?
• Keeping in touch with your clients - how do you communicate with clients and can you communicate in different ways?

Every business now needs to ask themselves these questions and be clear about how they deliver value and then shout about it. Don’t be shy. Tell your clients what value they’ll receive by dealing with you.

For help with your client proposition, visit our Business Brain

John Joe McGinley
Head of Business Brain
August 2013 

Business Development, RDR