Keep going is keep growing only if one keeps adding values in others' lives through the path of his life's journey - Anuj
Growing older, I frequently ask myself what my most valuable asset is. After some cogitation and discussions with dear friends, I finally decided on TIME. Time is the most precious resource because you cannot get it back.
The answer to this question matters. People often think of money as their most valuable resource, and while it is essential because it allows you to buy the things you need and want, you can get money back, but not wasted time
I recently had two experiences with clients that made me think about the offering of financial advice. The following happened:
- Client 1: “I am terminating our agreement and appointing an advisor not charging me any fees.”
- Client 2: “Before we continue, I want to know if you will charge me the same fee offered by another advisor.”
- Prospective Client 3: “My current advisor offered me free services for a year.”
To help understand what’s happening here, there is an often-told story of an admirer approaching Picasso in a Parisian cafe. True or not, it gets the point across. (Good2Great: January 2020).
The Story of Picasso’s Napkin
The story goes something
like this: Picasso had a drink in a restaurant – probably a traditional French
pavement cafe. The admirer recognised him and exclaimed, “Oh my goodness,
are you the famous Pablo Picasso?” the painter nodded modestly, and the
admirer went on to ask the famous painter to sign her napkin. Picasso was
happy to oblige and didn’t seem to mind the interruption at all; he went
one step further and added a small sketch.
As he handed over the drawing, he asked for a considerable amount of money in exchange. The admirer was horrified, “But that only took you five minutes!” she exclaimed. Picasso leaned over, carefully took the napkin back and said, “No, dear lady, that took me a lifetime.”
The Moral of the Story
The lesson here is probably pretty straightforward. Don’t undervalue what you do and offer. What would life be like for your clients without your product or service? What are the alternatives? It often transpires that their choice is to select a competitor product or service that is inferior and more expensive or need to do it themselves. You must of course be fair in what you ask for, but you should expect your customers to be fair with you and allow you to make a reasonable profit margin for the risk you take, the capital invested, your expertise and experience and the services you offer.
My answer to the clients mentioned above was:
- Client 1: “Nobody can offer any product or service for free – if you still believe the fallacy of a free lunch, feel free to join him.” After a week, he called back and asked if we could still keep his will in our safe because the other advisor charged R90 per month for safekeeping the document. Imagine my reaction.
- Client 2: “Do they provide the same services, infrastructure, experience, insights, expertise, analysis and continuity that we offer?” We continued focusing on advice and the value-added services at a fair fee.
Prospective Client 3: I was amazed by the remark and walked away. After four months, I got a call asking for help as he lost more than 20% of the value of his investments (or nearly 42 times the saving in fees for the next year).
After more than two decades and exposure to hundreds of prospective clients, I find that many individuals still focus on fees as the only condition to appoint a financial advisor. This approach to financial planning is a legacy of the sales industry from which the financial planning profession was born.
A salesperson is happy to put in effort in the hope of making a sale and understands that not all effort results in a deal. Professionals know their value and don’t hesitate to charge for their value. Salespeople adapt what they have to offer a client depending on the situation, and the professional financial planner is consistent about the value they offer.
I enjoy my job, our clients become friends of our practice (if not friends already), and we strive to touch lives and make a difference. Sometimes we are required to act as financial advisors and psychologists, fiduciary specialists, councillors, coaches, trustees, and many more. We train well-qualified staff, follow proven processes and compliance guidelines and only advise on regulated products. We never experienced any investigations by the FAIS Ombudsman or the FSCA and attempted to give our best under all circumstances. We sometimes make mistakes, absorb the cost, apologise and continue. We are only human and learn a new lesson almost every day.
Maybe one day, the market perception of financial planning will be “to plan for financial freedom and leaving a legacy behind”, and fees will not be such an issue. If signed, I would not take the napkin back.
