Originally posted at advisorservices.schwab.com, by Charles Schwab & Co., Inc., during October 2019.
• As competition increases, more independent advisors are offering comprehensive financial planning. But, for many, the way they communicate their value has not kept pace.
• One of the best ways to protect your client relationships from competition is to articulate the value you offer.
• Mitch Anthony, a top coach and founder of the Financial Life Planning Institute, helps advisors develop stories that hinge on creating immeasurable value for clients. Why? “Value that can’t be measured can’t be commodified,” says Anthony.
The financial services profession has reached a key inflection point. Competition among firms is increasing as the core of an advisor’s business—offering investment advice—is becoming commoditized. In response, many advisors have moved to offering more comprehensive financial planning services.
Data from Schwab’s RIA Benchmarking Study confirms that more Registered Investment Advisors (RIAs) are moving beyond portfolio management to support a broader set of services.1 And, according to a recent Cerulli report, 52% of RIA clients receive comprehensive planning advice—a figure that’s expected to climb to 57% by 2020.2 While the shift to comprehensive financial planning has been positive for advisors and their clients, it’s not without challenges, primarily: How do today’s advisors describe what they do for clients? How do they do it convincingly, in a way that drives business and builds trust? Many advisors are used to defining their value in terms like “outstanding investment performance” and “superior investment analysis.” But can they articulate their value in the more intangible world of financial planning?
Mitch Anthony, founder of the Financial Life Planning Institute, works with advisors around the world to help them develop unique value propositions and communicate the benefits that only a trusted advisor can offer.
Introducing Return on Life
Anthony developed the concept of Return on Life (ROL) to help shift the dynamics of the financial relationship. “As advisors, we are conditioned to make sure our clients have enough money,” says Anthony. “But we really should be asking if they’re getting the best life possible with the money they have.”
This simple shift allows advisors to change the conversation. “Now you can talk to clients about their unfolding story—where they came from, how they got here, and where they hope to go—which is the highest form of personalization possible,” he says. “And financial advice should become more personal to every client if we hope to prove worthy of compensation.” This way, an advisor’s value is not measured on return on investment but on their ability to increase a client’s ROL. According to Anthony, “By focusing on ROL, you move beyond providing commoditized investment advice and instead become your clients’ trusted advisor in all aspects of their life.”
“My mission is to help connect the financial conversation to the purpose it’s intended for, which is to improve one’s life.” — Mitch Anthony, Author, Your Clients for Life
Putting an ROL approach into practice
Demonstrating your unique value starts with placing the client’s life and story—not numbers and charts—at the center of the planning process. “The numbers exist to support the story,” says Anthony. “You don’t start with the financial plan and work the life plan into it. You start with the life plan and then build a financial plan to accommodate or accelerate it.” He recommends keeping three points in mind:
- Align means with meaning
To help clients achieve the highest ROL, you need to know their end objectives: who, what, and where. What is their money intended for? When you understand the intentions, align assets and decision-making to support them.
- Understand each client’s uniqueness
To best support clients through present circumstances, challenges, and opportunities, you need a deep understanding of where they’ve been, what shaped them, and their perspective on money. Explore their personal history with genuine curiosity.
- Monitor life transitions
Because money moves when life speeds up, clients need proactive planning and wise input before big life changes occur. Where are your clients on the financial lifeline, and are there any looming transitions? Acting in preparation not reparation is an important way to show your value as a trusted advisor.
Anthony says the traditional ROI value proposition is easy to convey to clients with statements such as “Last year, we saved our investors $7 million.” But, as mentioned above, communicating the value of financial planning services can be harder. Anthony offers six core statements that advisors can use to communicate that value:
We bring order to your financial life by helping you get your financial house in order at the macro level, with investments, insurance, estate, and taxes, and at the micro level, with things like household cash flow.
We help you follow through on financial commitments by working with you to prioritize goals and regularly review progress. We will hold your feet to the fire regarding your stated best intentions.
We help you avoid emotionally driven decisions by being available to consult at key moments and doing the necessary research to ensure you have all the information you need.
We help you anticipate and prepare for life transitions by regularly assessing potential events and creating action plans to manage them.
Before you make an important decision, we provide vital resources based on a thorough understanding of your situation and walk you through all options and potential risks.
We work in concert with you to help you achieve your best life, taking time to understand your background, philosophy, needs, and objectives. We collaborate with you and always offer transparency around our costs and compensation.
Is it time to reframe the value you offer?
When you frame your value in the context of improving clients’ lives, you are positioning your services in a way that can’t be commoditized. Consider what you’re doing to put your clients’ lives at the center of the planning process—and how that shows up in your communications. It can strengthen relationships, increase engagement, earn trust, and drive growth for years to come.
- 2018 RIA Benchmarking Study from Charles Schwab.
- The Cerulli Report: U.S. RIA Marketplace 2018, Exhibit 3.15.