Clients want advice, so why won’t they pay for it?

There was a lot in our latest Real Retirement research that didn’t surprise me one jot. More over-55s seeking advice; higher incomes; higher outgoings. But this caught my attention:
Since the RDR, 16% of over-55s feel the availability of financial advice has improved, 14% feel advice has become more transparent and 11% feel it is more useful to them.

Really? I work with advisers day in, day out and what I’m seeing and hearing is a different story. Besides, if this is true, why aren’t we seeing the evidence where it counts: in banked business?

Why can’t people just do what they say?

When there’s a disconnect between what people say and what they do, you have to wonder why. In this case, a reason presents itself quicker than you can count the change in your pocket. Cost.

43% of people think advice costs more post-RDR. That’s not necessarily true, but clearer charging structures and upfront disclosure of fees don’t help to disabuse clients of the idea.

Behavioral science: cliché or coup?

If I’m right, more people are interested in advice – asking for it even – but a good percentage balk at the cost. There’s a couple of ways you can respond to that:

1. Reduce your fees. Devalue the professional service you offer. Get poor quick.
2. Charge what you’re worth. Go after the right clients. Convince them that you’re worth your weight in, well, fees.

I make it sound easy. In reality, I know it’s not.

Behavioral science is fast becoming a cliché in the business world; it’s the buzz word on everyone’s lips. But if you can look past that, you can use it to your benefit.

If you’ve got any better charging conversation tips, please share. Tweet me @MrActuary.


6 thoughts on “Clients want advice, so why won’t they pay for it?

  • Two points to begin….

    You will never see a penny of my turnover in any provider survey as it all comes directly from my clients and has no involvement with product.
    The statement that clients will not pay is simply not true and in my opinion is just a part of the provider attempt to retain control of distribution through remuneration .
    The biggest problem facing the adviser community is that of realising that what providers thought it was worth paying ( in commission ) to get product distribution actually has no relationship with what the public thinks they are worth.
    The whole remuneration dialogue has been an attempt to work backwards from commission levels to produce equivalent hourly rates resulting in stupid figures of £200 + per hour.
    The latest attempt to undermine advisers using % charging ( used universally by the rest of the industry) is another aspect of trying to retain control.
    People will pay for things they value and instead of repeating this boring lie everyone should be working to find what the public actually wants from the financial services industry and then how to deliver it at a price people think is worth paying.
    Just as every other market operates !

  • I dont understand what you mean by “banked business”. It reads like you expect that there is a connection between a demand for advice and the demand for investment and insurance products. If that is what you mean, then you’re wrong; there isnt a direct connection.
    We are giving a lot of advice about the lifetime allowance, annual allowance and auto-enrolment. This is all resulting in additional income for us, but no “products” flow through (with auto-enrolment, the client might end up buying a product, but not usually from us, and, generally not for a year or so).

  • Thanks for comments – and the purpose of the article wasn’t in any way aimed at devaluing the advice process. If anything the opposite. In my role at Aviva, I see countless examples of advisers delivering excellent and valued services to their clients. The RRR suggests people are prepared to pay for advice, but fewer are doing so. I’m basically calling for those advisers who do this well to shout about it a bit more and remove this anomaly.

  • Hi Nick,

    As perhaps a more helpful response to your piece it would be useful to discuss what will drive business in future if indeed there is any truth in the theory of consumers being unwilling to pay.

    Are providers doing enough or indeed anything to make their products more consumer friendly ?

    If the client is to pay then should products continue to be presented using the same old gobbledegook language designed to hide charges and generally misrepresent the proposition.

    Should product liability be very clearly defined irrespective of the distribution channel ?

    Should we all- providers included – concentrate on what we can do rather than have endless pointless debates about regulation or the impact of the Revenue on pensions – issues which consumers are usually blissfully unaware of anyway.

    People don’t trust our industry so why don’t we try to restore that trust instead of bemoaning the fact that we are not seen to be worth £200 an hour..

    People do want to prepare for the unexpected and will pay if they can see value added to their financial arrangements.

    Should we be devising new and more appropriate business models which recognise the current perceived value of financial advice.

    Retail adviser models are still built around the remuneration paid by providers for product distribution. Should providers recognise this and the need for change and use their resources to help develop revenue systems which are more allied to cash flow originating from consumers.

    There is so much which can be done to help us all to take advantage of the huge unsatisfied demand for financial advice but we have to begin by recognising that we need to change.

    Providers have always controlled the linear flow of money downwards within our industry and it is an enormous undertaking to try and reverse this flow by creating an upward flow of money from consumers.

  • i also tire of this nonsense about clients not wanting to pay fees. People in all walk of life will pay for value, provide value and clients will happily pay. Promote products of Aviva and others and clients will never pay as there is no value. Simple.

  • Appreciate the construct comment Phil. I think we can all agree that an appropriately remunerated ‘valued’ advice service is desirable. I’m definitely interested in any debate/suggestion that moves this forward and builds confidence between advisers, providers and mainly customers.


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