Executive Summary
The growth of the financial planning profession over the past 40 years is a testament to the fundamental need that it serves; if financial planners weren’t delivering value, firms wouldn’t be growing the way that they are.
Yet for so many planning firms, there is no process to really evaluate what it is that clients want, and whether they’re receiving it. Instead, we craft an offering that we think clients will like, and then try to convince them to hire us to receive it.
But is that really the best way to build a business’ service offering?
The inspiration for today’s blog post comes from an interview, published in Bob Veres’ Inside Information newsletter, with Stephen Wershing of The Client Driven Practice. In the article, Wershing makes a striking point – that financial planning practices, in the process of developing a service for their clients, rarely take the most fundamental first step: doing the market research to figure out what their clients actually want.
Wershing makes the point most effectively in discussing – and criticizing – the common practice management and marketing advice of the industry:
“They all tell you that you have to define your target, and then spend time with yourself. You lock yourself in a room and dream up what people want, and take that dream out to the marketplace as if it was real market research. Strange as it sounds, their [the practice management consultants’] assumption—which nobody seems to be challenging—is that it will be just as effective as if you did real market research.” – Stephen Wershing
Wershing’s prescription includes conducting surveys, focus groups, and developing a client advisory board, so that you can really get at what your clients actually want. Not only, perhaps, to discover what your clients really do and don’t value, so you can provide it to them, but also to help you better develop your explanation to prospects about what it IS you REALLY offer that does provide value. Wershing notes that this can be far more effectively than simply using the common “differentiators” that most financial planners use, like providing good service, customized financial advice, and peace of mind – which I think he rightly points out is not really a differentiator at all, given that virtually every financial planner seems to say the exact same thing!
But I think Wershing’s criticism gets at a much more fundamental issue about how so many financial planning firms are built; many planners create their business as a reflection of themselves and what they would want, rather than a business-oriented endeavor to determine what the customers/clients want, and deliver it to them. Perhaps it’s part of the nature of being in the advice-giving business; we have a constant tendency to explain to our clients why our advice is right, and although we may work hard at hearing our clients express themselves about their own financial goals and concerns, we often are not nearly as effective at listening to constructive criticism about our own selves and businesses and the services we offer. As Wershing points out, “If a client says ‘this other advisor provides these services better than you,’ we have seen advisors respond with a version of ‘Let’s review why we provide this service this way.’ The message is: ‘You are wrong; we know how to do this,’ which stifles the conversation.” Have your clients ever asked for something to be different in their financial planning meetings, or experience, or process, with you? Did you view their “suggestion” as an opportunity to change how you provide your services, or did you “educate” the client about why what you do is the “right” way to deliver financial planning? And if you did the latter – perhaps with the best of intentions – what is it that even makes that the “right” way to do it in the first place… besides, perhaps, the fact that you think everyone else does it in the same [undifferentiated] way?
Thinking about this makes me wonder how many aspects of financial planning we emphasize that aren’t really of value to clients, and what we fail to focus on that really would be valuable to them. As I have written previously in this blog, I think we actually have a very poor perspective on what it’s like to BE a financial planning client, since, remarkably, so few of us every actually become consumes of the service we offer. No wonder we may not really understand what is and is not most important from the client’s perspective.
So what do you think? Is your practice created in your own image, or was it truly created for the wants and needs of your clients? Have you really ever done any market research of what your target clients say they want, as opposed to simply delivering them what you think they need, and do you have any way to differentiate between the two? Do you have a systematic process to determine what your clients really want and need, whether you’re delivering it to them, and how to deliver it more effectively in the future?
Great thought-provoking piece, Michael.
I actual have hired a financial planner in the past, prior to entering the industry and have been doing thinking around when I hired a planner recently. This weekend, in fact, I received feedback from an individual reviewing my website that really drove home some of my own experiences.
The most vivid memory of the entire process of hiring and working with a financial planner was that I really had no idea what to expect from financial planners and then what to expect for ongoing service. I was clueless, but knew I needed financial help. There really was no good way to get this information, either. It makes me wonder how many of our prospects and clients either have no idea what we really do or have entirely different expectations than we do.
I would also add one question to this discussion. The real question to me is, are we offering what our clients want or what our clients need? I would argue that for those of us that must and desire to act as fiduciaries, it is a requirement to provide what they need. Is it the best way to run a business? No, probably not. But we don’t really get that choice as a fiduciary.
You’ve got me thinking…wonderful! Thanks.
-Nathan-
First, thanks, Michael, for doing one of the things you do well: Picking up on a point and advancing the conversation.
Nathan, a quick response to the question you posed at the end of your comment. In the end, clients count on us to provide them what they need. And we should provide them what they want as well, as long as it doesn’t conflict with good advice.
Unfortunately, much of what they need is difficult or uninteresting to many of them. Think life insurance. Almost everyone with dependents needs it, and practically no one wants to talk about it.
What I have always found most helpful is to start with what they want, and work around to the stuff they need before we are done. Get the client talking about something they are excited about, like saving for some big goal. If they bring up the required items on your checklist, like wills, taxes and retirement, during the conversation, great! If not, you can bring it up in the meeting.
More to the original point Michael referred to, though, is not so much what we provide as how we provide it. Much of the feedback I have facilitated for advisors has a lot more to do with how the advice is communicated (nature of presentation materials like financial plans, amount of time allocated in meetings to different topics, how fast advisors reply to questions and through which medium) than the nature of the advice itself.
Hope that’s useful.
Steve
Steve,
I think you have a good point that it’s as much about how we provide the advice, as what the advice is (at least in this context).
Your life insurance example is a good one. Most people need it, most people are bad about getting it done. Yet in point of fact, I know that we have several clients who appreciate that one of the “services” we provide is pushing them to do the things they know they need to do but haven’t.
So the advice is “we’ll figure out whether/what/how much life insurance you need.” But the service is “and we’ll help you to make sure you actually get it done.” The “true” value is not the insurance recommendation, then; it’s helping the client actually GET the insurance coverage, including holding htem accountable for doing it when they said they would.
I’m sure that could be said in a far more elegant manner, but that’s the basic point. 🙂
– Michael
Great comments Michael. Thank you,
I believe marketing people will tell you that clients don’t know what they want, until they see or experience it. We’ve asked a sample of our clients what they want are working to develop various servcie offerings.
We offer our clients advice they need in a service offering that works best for them.
We also have developed a short list of other advisors that have difference service offerings to whom we can refer clients that have different needs.
Dan,
Thanks for sharing.
I suspect that you’re probably already in a small minority of firms if you have a process for reaching out to a sample of clients to find how they wish to be served, and adapt your practice and offering to serve them in that manner.
Has it led you to any services or ways of delivering financial planning that were a “surprise” to what you originally anticipated?
Great post. Especially because I ask this every day as I continually tweak and try to improve my product.
I think there are 3 issues. What they want, what they need, and how we want to run our practice.
But I usually decide only 2 of the above matter. Those are what they need and what I want to offer.
I’m often tempted to offer just what they think they need as it’s fast and easy money. But it always bothers me that the real problems would be ignored so I end up declining the client or offering what they need.
I’ve decided to follow the prescription model. Client comes in and asks Dr to remove unsightly mole. Dr says we will do that and send it to lab to check for cancer too. Client says no I’m not worried about that, I just want to look better. Dr says I’m sorry but the risk is too great for you and I so go to another doctor.
And finally I think it’s important we provide a model that makes us happy as business owners, otherwise we can just get a job working for someone else.
I often struggle with these choices, but I try to use the above model to make my decision
Chuck,
To me the spirit of this isn’t necessarily about “what solutions do we prescribe to the client” – i.e., should you also check the mole for cancer, in addition to providing the removal.
It’s more about:
– What tools do you use to remove the mole
– What anesthetic do you use
– How do you schedule the appointment
– Where do you meet for the procedure
– What nurses are involved, and how does the patient interact with them?
– How do you handle the discharge process with the patient after the procedure?
– What is your post-op recovery process with the patient?
Etc., etc.
My concern is not that we give some financial planning recommendations that clients “don’t want to hear.” My concern is that we do a lousy job communicating the information to them, because we don’t spend enough time getting to understand how they would like to receive the information in order to act upon it.
Or something to that effect. 🙂
That makes a lot of sense and certainly a good objective for us individually and as an industry.