Every Financial Planner Must Review their Advice Model Statement
To deliver value to clients and be respected as an advice based professional, a financial planner must have a written Advice Model Statement. The Royal Commission has highlighted the need for
advisers and financial institutions to meet the service commitments promised to their clients. A well thought out Advice Model is essential for this.
An Advice Model Statement documents the practice’s advice, professional services, fees, pricing model, target client profiles, and the client experience to be delivered. It ensures greater adviser
focus on delivering value and solutions to clients. The statement is the blueprint for developing effective processes and back-office functions to support advisers in delivering advice. The Model is
used in staff training and to demonstrate to Centres of Influence how the practice advises and manages the relationships with referred clients.
The 4 pillars for a comprehensive Advice Model Statement are:
1. Build depth with expertise.
2. Make advice ‘tangible’.
3. Make target client profiles meaningful.
4. Use an Advice Model Statement.
Advice Model Pillar 1: Build depth with expertise
- Expertise is the knowledge, skills, competencies, and experience of advisers in financial planning. Expertise is tailored to meet the needs of individual clients and is delivered as advice.
- Expertise is featured in the Advice Model as the core competencies and advice to be delivered by advisers to categories of clients.
- The practice must have the expertise necessary to meet the needs of target clients and the promises in its marketing messages.
- When updating the Advice Model to add new advice or services, the current expertise of advisers is reviewed. This identifies any gaps in their expertise for providing advice. The gaps are filled
through adviser training, the recruitment of qualified advisers, and third party consulting relationships.
Advice Model Pillar 2: Make advice ‘tangible’
- It is necessary to differentiate between the intangible features of advice and its tangible benefits. The adviser focuses on the tangible outcomes sought by clients in terms of the value,
benefits, and solutions they are receiving, or will gain in the future.
- The 5 methods for making advice tangible are;
- Identify the desired outcomes and risks for each client.
- Reinforce the qualifications, expertise and experience of each adviser.
- Highlight the specialisation and application of the advice to specific client needs and desired outcomes.
- The delivery of ongoing client support and the formal review process.
- The application of documented systems and processes.
- Advice becomes tangible if clients understand the direct benefits to them.
- Advisers must reinforce their competencies and the resources of the practice.
Advice Model Pillar 3: Make target client profiles meaningful
- Target client profiles are the basis for developing the Advice Model, individual fee-for-advice packages and determining the marketing strategy.
- The Advice Model fully details the attributes for each target client profile and the areas of advice and client experience tailored to their needs.
- Profiles need more detail and depth than the typical profile created by advisers in the past. The criteria for classifying clients includes;
- Meet criteria for being advice based, not fee-averse.
- Demographics and financial attributes.
- Goals, emotional and personal needs.
- Advice and services required, and advice triggers.
- Internet and social media use (for communication and engagement).
- Desired outcomes for the practice, e.g. level of fees per client.
Advice Model Pillar 4: Use an Advice Model Statement
- The Advice Model Statement is a complete explanation of the advice provided to clients. Importantly for marketing it details the target client profiles and the practice’s approach to charging
- The Model not only defines what the practice does, it provides clarity in terms of solutions and the value delivered to clients. It is used in staff training, and to demonstrate to Centres of
Influence how the practice advises and manages the relationships with referred clients.
- It is a marketing asset as the Model defines 3 of the 5 ‘Ps’ in the marketing mix:
- Products (advice and services).
- People (target clients).
- Price (fees).
- The Model is updated with feedback from clients, new advice initiatives, and the results from marketing campaigns.
This content is from my free PDF download “Financial Planner Marketing Blueprint” available at my website. No email address or information required – just download the document.
Next article to be published – How to use your Advice Model Statement as a marketing asset.