Adviser Stories: Clients value relationships more highly than products
02 July 2019 | Practice Management
Having spent 20 years in financial services, I've witnessed a shift. It used to be the case that the adviser-client relationship was very transactional. Conversations with clients focused on valuations and funds. In my time as an adviser, I've witnessed a growing realisation among advisers – clients value the relationships they have with advisers more highly than they value the products. Conversations began to shift. Getting the investment bit right remained crucial, but clients seemed to like talking things through with their advisers and feeling like we were interested in their lives. Meetings were less focused on reporting and products and more on clients' plans and their lives.
At TFP, we try to make a focus on clients our guiding principle. One of the most effective ways we help clients understand their finances is through the use of a cash-flow modelling tool. It helps clients' finances come to life but the real key to its efficacy is the ability for an adviser to plan live with a client. There's even a 'what if' button – clients can see first-hand what would happen if their situation were to change fundamentally. An adviser can guide a client through the different trajectories their life might take. That's a really powerful way to help a client understand how they can make their money work for them.
Another way we live out this guiding principle is through our charging structure. Charging by percentage of AUM didn't feel right to us. Why should you pay more if you have more money? We are transitioning to a fixed fee for both initial and ongoing charges. That means we truly have a relationship with the client, not with their money. New clients tend to embrace it. However, historically, charging by percentage of AUM was the only option available, which means existing clients tend to go on a bit of a journey. They come to recognise its benefits and how it put clients first. As most of them ran businesses themselves, they also intuitively feel that the standard model, where an adviser earns less as a client spends more, doesn't make sense. We're big believers in the power of communication.
This year, we've been working on a full rebrand of our firm. An important part of that was a new communications strategy. We want our relationships with our clients to be real and personal, so in addition to investment updates, we communicate about what each member of the firm has been up to – exam results, for example. We're a close knit team – there are only seven of us – and we think that our clients will be best served by a happy and fulfilled company. That's why we think it's really important to encourage all our employees to grow and challenge themselves. We also find that many of our clients share the same interests and concerns so we're planning to create a space for them to interact with other and share experiences. We've even done real life mixer events with our clients, which have been a great success. Our client focus has already had an impact. Previously, much of a client meeting was taken up with facts. Now we try to spend more time talking about what really matters to a client and finding out how they want to spend their life. Often, it's about giving a client the confidence to use their money. It's really rewarding when we can help clients give themselves permission to book that holiday they've always dreamt of. We have a place in our office where we display the photos our clients send us of themselves on holiday. They often send them with a note that they'd never have spent that money on themselves five years ago, but we made them realise they could. That's incredibly gratifying to see.
Casey Mills, Director, TFP Financial Planning
Vanguard's Adviser Stories are a series exploring adviser-client relationships.
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The opinions expressed are those of the individual author and may not be representative of Vanguard Asset Management, Limited.
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