Customers or clients?

The following blog post is an extract from The Happy Financial Adviser. A book written by Truly Independent Director Andrew Goodwin. To purchase your own copy click here.

In financial services and financial advice speak, the consumer is known as ‘a client’; one who engages with a professional for advice and assistance. I have a major issue with this terminology. Clients usually don’t shop around whereas customers do. You want clients, not customers, so you have to ensure your customer becomes a client.

It may appear pedantic for a financial adviser to consider whether there is a difference between customers or clients, but there does exist a subtle difference in their perception of us and our value to them. To strengthen the difference, a client should be able to say, ‘Having a financial adviser has made a difference in my life, for the better,’ whereas a customer would see their financial adviser as their last adviser, someone they see only when they need help. How your clients see you, is a real test of your impact. A customer could say, ‘I made an investment with a financial adviser a few years ago, and I think it’s doing okay.’

Understanding if your client’s life is better having taken your advice is not an easy task and only tends to be considered in hindsight. However, the best way to measure this is to set a target or goal and monitor progress towards that target annually. If a client has a £300,000 shortfall, say, in their retirement target and has given you £150,000 to invest over the next ten years to achieve that goal, then taking a high risk could be considered. However, best is to recognise that chance aside, doubling investment in ten years (72 rule) is a challenge and what is needed is more client funds to invest. The solution would be an agreed obligation to both the client and adviser to achieve the £300,000 target together. The adviser will do what he/she can with the correctly assessed client risk, and the client will need to generate more money to invest from his or her remuneration. Such a relationship will cement your customer as a client to achieve the target. Even a short term goal will cement a stronger client/adviser bond. Investment without a target is aimless, and your customer will remain so and be more easily poached by another financial adviser who makes greater (usually speculative) promises of fund performance.

I believe that everyone should have a financial adviser. For those people who do engage with a financial adviser, the alternative to not having an adviser is very rarely considered. It will help you if you ask potential clients these two short question – maybe even as part of your pitch. Do you have a financial adviser? Do you know your shortfall? Remember to express that not all advisers are the same, and you will start to build a confident perception of yourself and ensure that potential clients do not become reliant on pub recommendations or the speculative performance promises of your competitors. People should close their ears to others and prepare to pay for high-quality advice, just as they are happy to pay for other professionals.

Enjoy this blog post?

The Happy Financial Adviser is a must read financial adviser book for anyone in the industry who feels they are not maximising their potential and wants to be happier.

To purchase your copy click here