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Explaining the Value of Financial Advice to Clients and Prospects

Financial advisers may need to explain why they’re worth their fees, and what they can do for their clients, or prospective clients.

Financial advisers offer a valuable service to their clients. It’s likely that most, if not all, of your clients would agree with this statement -- otherwise they probably wouldn’t retain your services. That said, taking stock of your value proposition and the value of the advice you provide to your clients can be helpful as you have discussions with both current clients and prospective clients.

Here are some thoughts to consider.

Your Education and Credentials

This, of course, is not about just bragging to clients and prospects. But the reality is that most advisers go through a lot of education and training. This is both in connection with attaining the various professional designations and certifications they may hold and with regard to the continuing education requirements for maintaining these certifications.

Certifications and designations like CFP, CPA, PFS, CFA, the CLU or the EA all require various levels of education, the passage of one or more exams and generally some level of continuing education. Many advisers regularly attend professional conferences and take advantage of other opportunities to learn from others in the financial services industry.

Beyond this, many of these certifications require at least a bachelor’s degree.

The Value of Experience

Beyond education, experience is an excellent teacher. As an adviser you’ve likely dealt with a wide variety of client issues and situations. You’ve lived through the ups and downs of the stock market and the economy, and helped your clients make sound decisions during these difficult periods.

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The fact that you do this work on a regular basis and have helped clients deal with issues like retirement planning, what to do with a 401(k) rollover, assessing their casualty insurance needs, helping business owner clients develop an exit strategy and host of others likely has prepared you to assist your clients with specific situations in their financial life.

If your practice focuses on clients within a specific niche, you’ve likely developed a level of expertise in the financial issues facing those within your area of specialty. This might include educators, medical professionals, professionals working for a large employer in your area or others. You understand the issues facing clients in this niche. Whether it’s the ins and outs of the pension plan for teachers in your state, to the stock option plan for a major company where you have a lot of clients, your experience in helping clients deal with these types of issues is a key element that you bring to client relationships.

An Objective Viewpoint

As their financial adviser, you can provide a detached perspective. This doesn’t mean that you don’t care about the financial outcomes that your clients achieve, but it does mean you have a more objective perspective in that you aren’t living their situation.

Your perspective means that you can take an unemotional view of the client’s situation. This allows you to apply your knowledge and experience to addressing their financial issues and to making recommendations to them based on this. In fact, this might be the most important thing that you do for clients as their financial adviser.

Several years ago an adviser shared his response to a client who asked him why he was worth the fee the client paid him. The adviser’s response was that he kept the client from making dumb decisions with their money. The adviser said this client never again questioned the value of the adviser’s advice.

Pulling it all Together

The value of the advice that you provide is not in your ability to predict the direction of the stock market or to pick the next hot stock. Rather the value of the advice you provide as a financial adviser is the perspective, the experience and the expertise you bring to bear on your client’s financial planning needs.

Whether it’s about how to handle a retirement plan rollover, about how to allocate their portfolio to properly balance potential return with downside risk protection, about dealing with estate planning issues or a wide range of other issues, your experience and training bring a lot to the table in helping your clients along the best path forward for their situation.