Friday 15 July 2016
5 simple tips to help win over price sensitive clients
Friday 15 July 2016
What price sensitive clients are really asking you to do is to demonstrate the value of advice
You would be hard-pressed to find many Australians who wouldn’t benefit from quality financial advice. But for some, convincing them that it is worth paying for can be challenging.
What price sensitive clients are really asking you to do is to demonstrate value for money. They want to understand how they will benefit from advice, the level of service you’ll provide and why it’s worth some money.
The intangible benefits, such as the peace of mind that they have an expert supporting and guiding them are equally as valuable as the financial benefits, and these need to be articulated too.
Here are five simple techniques to help you communicate your value.
1. Demonstrate that you really understand you client's needs
“Understanding your client is the single most important thing you can do when it comes to overcoming any price sensitivity,” says Noel Yeates, senior adviser for Macquarie Wealth Management. By clearly articulating that you understand your client, what’s most important to them, their hopes, their dreams, and that you have the skills, experience and knowledge to help them get to their goals, you will begin to transform perceptions.
“The issue is not with the client, it’s your ability to demonstrate your value to them. Value in our space is not simply doing a transaction, it’s pretty much everything but. The value is in the research, it’s in the risk management, but most importantly it’s in understanding the clients’ needs and being proactive with those needs,” says Yeates.
“You need to show the client how you’ll be looking out for their interests, especially at times when they might not be looking out for or even aware of any risks.”
2. Separate the value of advice from market performance
Given the value of advice is subjective and varies between clients, it may be tempting for advisers to want to measure some of their value to clients on an objective measure, such as investment performance. However, simply focusing on investment performance may mean you’re missing opportunities to demonstrate your true value.
Advice is important when things are good, but it’s crucially important when things are tough. It is often during times of market turmoil that the real value of advice comes into play. In these circumstances, you can help to prevent clients from acting on fear and abandoning their well-considered, robust investment plans. For the client, having a safe pair of hands looking after their interests, and expert guidance to ‘stay the course’ can be more important than an investment return at a given point in time.
By separating the value you provide to your clients from market performance, you will be able to focus your conversations on the benefits of your long-term strategic plan.
It’s also important to highlight the intangible benefits of advice to clients.
3. Be upfront about pricing
“Don’t hide the price,” says Yeates, “put it up front.”
Having a very open discussion with the client about what they’re paying for will help to build trust. “Your business model should have a very clear articulation of what value you bring to the client…‘this is what you’re paying me for, this is why I’m giving you this advice’.”
“If your value is purely a transactional piece – whether it is doing a tax return or a share trade – then the client will discount you because they don’t perceive value in that” says Yeates.
It’s also important to highlight the intangible benefits of advice to clients. For some, they have neither the time, willingness, ability nor confidence to make sound financial decisions. Others may simply feel overwhelmed by the number of choices of financial products and strategies. For these clients, peace of mind is what matters most. For others, it’s simply a case of being time poor. Having an expert to take care of their affairs is of very real value. While these factors are difficult to measure, they are no less important.
4. Differentiate yourself
The value propositions of advice are evolving, as are client expectations of advice. The emergence of robo-advice in particular has the potential to influence perceptions of value.
“I think what robo-advice does is give you the opportunity to demonstrate absolutely clearly with a very clear benchmark why you’re valuable,” says Yeates. “I don’t view it as a negative, I welcome it. Because it allows me to articulate what I do that a computer can’t. You’re able to introduce the human element, the caring element and the service element.”
5. Uncover any hidden objections
If you continue to sense that the client has some hesitations, don’t be afraid to dig a little deeper to get to the bottom of it. “Invariably what you might find is the client has had a bad experience in this area in the past and has felt that they didn’t get something that they’d paid for,” says Yeates. “You have to overcome the barriers that are invisible, and it’s almost always historic. Dig deeper into the client – understand their background and history. Then what you’re able to do is use that experience and differentiate yourself from that experience.”
Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 and does not take into account your client’s objectives, financial situation or needs.
This information is provided for the use of licensed and accredited brokers and financial advisers only. In no circumstances is it to be used by a potential client for the purposes of making a decision about a financial product or class of products.