Jennifer Kuta, Caldwell Investment Management Ltd.
July 6, 2021 – In all of the economics, business and marketing training I’ve been exposed to over the last twenty-five or so years, there is alarmingly little emphasis placed on the importance of a strong Unique Value Proposition (“UVP”), and even less available to help you really understand what a Unique Value Proposition is and how you can develop your own UVP for your business.
I went to the experts at Advocis for their advice. This Blog is adapted from questions posed to Barbara Riddell, Vice-President of Education and Membership at Advocis, Canada’s largest voluntary professional membership association of Financial Advisors, representing more than 13,000 members.
Barbara is primarily responsible for education leadership, corporate business development, and strategic direction. She also oversees chapter relations, member services, and student services. More than 25 years’ effective leadership experience in financial services in product development, communications, training, and coaching have given Barbara the skills, knowledge, and perceptiveness to position Advocis as the industry standard in Advisor education.
That is a great question, and one that we examine closely in our Professional Financial Advisor Designation Program. A Financial Advisor’s value can be quantitatively defined by competence, proficiency and performance measures (such as portfolio value) but it can also be differentiated through significant qualifiers stemming from a unique combination of their skills, attitudes, experience, and education. These differentiators are what can set the value of an Advisor apart from the crowd, but they can be challenging to articulate as a value proposition. Layered into this – and perhaps more importantly – is how clients perceive the ‘value of advice’.
Just as value is unique to each Advisor, the value of financial advice can also mean something different to each client.
For many clients, the growth of their portfolio assets might be the most critical piece of the value they assign to their Financial Advisor. Thus, an Advisor’s value is likely to be determined by wealth accumulation through superior portfolio performance.
However, it is also true that what many clients value at one point in their lives may not be what they value in the future. The precipitating factor in this value shift is often a life-altering event, such as divorce, birth of a child, job loss, starting a business, death of a family member, inheritance, retirement, or even a pandemic! These events change relationships, alter client’s needs, and can impact their perception of value. The Advisor skill set valued in these situations is to have “under the table” discussions with clients to probe and understand their goals, help them maintain a long-term perspective, and taking a disciplined approach in adhering to their financial plan.
In the 2021 article “Value of an Advisor Study – A sharper focus on the value of your advice” by Russell Investments, the value of an Advisor was quantified as a measure of the technical and emotional guidance a trusted human Advisor can offer. Having concluded that the overall value added by an Advisor in 2021 was 3.95%, the contribution of behavioural coaching to that value was a dominating 2.0%. This also reflects an addition to Advisor value of more than 1% over the previous year. This is not surprising given the challenging times of 2020 and it highlights the evolving Advisor role and the value they bring to clients.
Client retention is higher for Advisors who effectively communicate their value to clients. According to a 2019 survey by EY Global Wealth Management, “one-third of clients switched providers or moved assets in the past three years and another third plan to do so in the next three years.” Of the 2,000 individuals surveyed, the highest overall value for financial advice was during major life events and as wealth and investment knowledge increased.
The global pandemic has been a hugely significant and life altering event, affecting Advisors and clients alike. As we begin to envision a post-pandemic world, there is the potential for Advisors to revisit their value proposition in this light – to consider the value brought to clients, to contemplate their behavioural coaching role and determine how to effectively communicate this to clients.
Some of the steps to bring value to clients or prospective clients:
As part of the Professional Financial Advisor Designation program, we looked at what experts say about best practices for crafting a value proposition that resonates with clients. Included below are best practices based on research conducted by Pershing (BNY Mellon).
Although these promises are common amongst Advisor value propositions, you still need to consider adding them to ensure your value proposition will resonate.
Remember, that it is always a best practice, and in your best interests, to go over any client-facing materials you create with your compliance team.
Whether you are a new Advisor looking to create a UVP from scratch, or a seasoned advisor who wants a UVP refresher, your prospects and clients will be convinced “You’re the Top”.
As usual, there is a song title hidden in this blog post. What is the song and who is singing it?