Wealth management services and products are commodities. But, that does not mean that all wealth managers are inherently fungible. Without question, some wealth managers are better than others. That said, a large majority of wealth managers are unable to differentiate themselves from their competitors. Many times even when they are more capable, they blend in with the morass of middling wealth managers.
The reason for this is simple…relatively few wealth managers are proficient at communicating their value to their clients. Think of your situation. What value are you providing your various clients? Now, if those clients were asked what value they were receiving from you, how much alignment would there be?
When we researched this issue, we found that clients would say that their wealth managers were providing investment services. The clients would rarely talk about the quality of those investment services. And, even though the wealth managers did a lot more, these other services and products were brought up in no more than one out of twenty situations.
As a wealth manager, if you are providing more expertise than basic money management, such as sophisticated tax planning, the degree to which your clients can identify the value you are delivering tends to diminish considerably. It might not be that your clients do not recognize you are doing more for them, but they tend not to understand what that is. At least, not at a level where they can comfortably and accurately explain the value you are providing.
When clients fail to understand the value you provide it can be severely detrimental to your wealth management practice in several ways including:
- Clients only focused on their investment performance. This singular criteria, which is sometimes out of your control, can lead to complications that hinder your success.
- Clients only focused on the cost of your investment management services. When cost is the major deciding factor, there is a strong possibility you may lose clients when a competitor undercuts your fees.
- Clients not appropriately compensating you for the value you deliver. This can take the form of not converting new prospects into clients.
- Clients are wary and usually unable to effectively recommend you to others. Commonly, if they cannot explain your value beyond you managing money, they are unlikely to want to attempt introducing you to their peers.
By smartly communicating the value you can deliver, not only are you mitigating these types of problems, but you also are helping your clients make better use of your expertise. You will also tend to get more referrals when your clients can capably decide the value you can provide.
The key to communicating value is communicating the outcomes of your client receive from the services and products you deliver. Very importantly, you need to specify how those outcomes match up with the goals and concerns of your clients. You incur several considerable benefits when you are adept at communicating the value you can deliver to your clients including:
- You can better help your clients address their needs, wants, and concerns.
- You are fairly compensated, with less opposition, to your pricing model.
- You increase the continuity of your relationships with your clients.
- You have more and stronger opportunities to maximize these client relationships.
- You dramatically increase the likelihood of getting referrals from your clients.
Being able to adeptly communicate value is also instrumental in creating a steady stream of new clients from other professionals such as accountants and lawyers. Moreover, by educating these other professionals on how they can communicate your value, these professionals you will likely end up with more preferred clients.
By definition: Communicating value is a function of connecting your expertise and that of your wealth management firm with the specific interests and concerns of particular clients.
Communicating value can take several forms. A lot of this is a function of your personality and style. Still, there are some requirements to effectively communicate value:
- You have to develop a deep understanding of the interests and concerns of each of your clients: A deep understanding, as opposed to a surface understanding, is crucial. Developing this understanding is much easier than most wealth managers imagine. A powerful way to develop a deep understanding is to use the Everyone Wins Process.
- You have to be able to describe your relevant expertise—the value you can deliver—based on the sophistication, objectives, and needs of each client: What often is the case is that many wealth managers rely on a set way of describing what they do as opposed to making the descriptions and explanations resonate with their clients. A superior approach is to customize how you talk about the value you can deliver.
- You have to regularly solicit feedback from your clients concerting your descriptions and explanations: Just because you think you are communicating value, that does not mean you are doing so. Your clients must recognize the value you are describing. The way to ensure that everyone is on the same page is for you to be empathetic and actively solicit feedback.
Very likely there are times you are doing a sensational job of communicating your value. However, if you are like most wealth managers, you are not being very systematic about communicating your value. You are busy delivering value and occasionally you neglect to communicate the value you are delivering. This problem is often corrected by becoming more disciplined.
The benefits of communicating your value to clients are considerable. It is therefore worth the effort to make certain all your clients understand and can explain the value you deliver.
RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.
