Across the globe there’s one question on almost every adviser’s lips, “How do I show my clients the value of my advice?”
Here, in the UK, in the new non-commission world with transparent fees structures, it’s no different. It’s an issue for many advisers and businesses trying to prove their value in a competitive world. FinaMetrica included.
Of course, value isn’t something advisers can simply ‘add’ to their services. They offer what they offer and if the benefits of their service are communicated well, clients will easily see their value. If the benefits are not well communicated, then an adviser is more likely to miss out on opportunities and, at worst, their business could fail.
So, with this in mind, I want to set out clearly what FinaMetrica does and highlight how we can help you more effectively engage with your clients and manage their risk expectations. If you succeed in doing this, you’ll earn clients’ trust and build your own ‘trust machine’.
So why is our service so important to advisers?
I spend much of my time, six months a year at least sometimes more, travelling the world talking with existing and prospective subscribers. This is what I have learned. Our really smart customers use our risk tolerance system not just to meet regulatory obligations, but to build authentic relationships with their clients based on openness and honesty. Yes, they actually want to know their clients’ tolerance for risk. They understand why it’s important.
The three-part FinaMetrica tool kit is designed to help advisers better communicate with their clients. It’s a psychometric web-based risk tolerance test with 25 questions which, when answered, immediately results in the production of a Personal Finance Risk Tolerance Report. A score of between 1 and 100 is assigned to the client. The FinaMetrica risk-tolerance score can then be mapped to a generic multi-asset portfolio. Soon a 12-question version of the test will be available, suited to be part of limited-advice situations such as the new ‘at retirement advice’.
Advisers like the notion that our risk tolerance test is independent, applied internationally and has been proven through every market cycle since 1998. They tell us it helps to build their credibility in the eyes of prospects and confirms it for existing clients.
Typically, where we’ve seen our service put to really good use, the adviser asks the client to take our risk tolerance test and then they talk about the results together. Many advisers say to their clients, “No test. No report. No advice.” If their client has a spouse, they too take the test and any differences in risk tolerance scores between the two are also addressed. They can then change the score if they believe it’s not really ‘them’. The outcome of the discussion is an instruction to the adviser. “Take this agreed risk score into account when you give me my financial and investment advice please.”
In a nutshell – that’s what we do.
Advisers see value in this approach. They like the conversations that emerge. It puts clients in the driver’s seat. And it stops the adviser from projecting their own tolerance for financial risk onto the client – and getting it spectacularly wrong.
The FinaMetrica test is scientifically and technically robust and it is very easy to use. We work hard to retain the epithet ‘best of breed’. By using our system, you’ll find that you’ll have clients who are happier and enjoy richer relationships. This is the equivalent of building an open and transparent’ trust machine’.
You can start by taking your own test. Compare it to the one you are currently using. It will take you anything up to 15 minutes to complete. The first test is on us, at http://www.riskprofiling.com/your_risk_tolerance