5th September 2012

Aegon: We must sell the value we add?

For months the industry has been talking about the need to ensure each advisory firm has a tangible and transparent client proposition for RDR. However, when we have that how do we make sure clients will pay for it?

If we take the findings from the latest JP Morgan Asset Management report this is one of the greatest challenges facing our profession.

The report from JP Morgan entitled Winning propositions: The consumer market post-RDR, looks at the appetite among UK consumers for fee-based advice, and the different advice services likely to appeal to consumers seeking advice.
JP Morgan based its findings on a survey of 2,028 individuals with a gross household income of over £50,000, having previously established that a gross household income of £55,000 is the tipping point where consumers become significantly more interested in taking advice.

The company also carried out one-to-one interviews with adviser firms that have established successful fee-based models. The key findings make stark reading it found that:

• 13 per cent of respondents were likely to seek out an ongoing fee-based service, but found 40 per cent were prepared to pay for task-based advice services.
• More than 80 per cent of those surveyed said they would seek professional advice to some degree, while only 19 per cent wanted to transact on a purely non-advised basis.
• Some 75 per cent of respondents had used an adviser in the past. JP Morgan found that interest in using a professional adviser peaks among individuals with a household income of £150,000 to £250,000.
• Retirement planning was identified as a key driver for advice for 75 per cent of those surveyed. 25 per cent said they were confident enough to research and set up a pension plan for themselves.
• Clients would be most willing to pay a fee to an adviser who is proactive in managing ongoing portfolio adjustments, and provides regular reports and early warnings of market volatility and financial events.
   

One fact that struck me most was that the way in which clients wish to deal with advisers is rapidly changing as we embrace the second industrial revolution. The report found that Clients preferred to contact their adviser through email, with face-to-face meetings as a secondary preference.

I would urge everyone to read this excellent report and to ensure that no matter what proposition you develop for your business post RDR you ensure that you sell the value you add to clients.

I fundamentally believe that the JP Morgan research highlights the fact our profession has been negligent in shouting from the roof tops the value we have added. For to many years because of the crutch of commission we have kept quite about all the work we have done for clients and a perception has evolved that advisers do what they do for nothing!
We must rail against this perception. It must be changed. We as a profession must now start talking about the experience, empathy, expertise and solutions we can provide and clients must be aware that these are valuable commodities that have a deserved cost attached to them.

We have interesting times ahead, but I am convinced, that if we can define and articulate the value we add then we can ensure that more and more of our clients will be happy to pay for this. To see how AEGON can help visit our client proposition area on our business brain website.
 

John Joe McGinley 
Head of Business Brain AEGON

RDR