Determining your value proposition

01 September 2010 Rob Macdonald, Head of Consulting, Nedgroup Investments

The job of a principal in a financial planning practice is a careful balancing act between the roles of business owner, business manager and financial planner. It is a real challenge to juggle these three roles, and often the role of financial planner dominates that of owner and manager. We often hear the comment from financial planners that “I don’t have time for management because I’m so busy getting and servicing clients”.

This is the classic chicken and egg situation, where if financial planners spent more time working on their businesses, they might find the client acquisition and servicing less frenetic.

When working on your business, often the logical place to start seems to be with drafting a business plan. But there is no point in doing this if you are not able to articulate clearly your value proposition to clients. In determining your value proposition, key questions to consider would be: What key benefit are you offering your clients? Why do your clients choose to come to you rather than a different Financial Planner? And, what is it that makes you the best at what you do?

These are questions that many Financial Planners simply do not ask themselves or give much thought to, yet they are keys to the success of their business. This has become ever more important in recent years, as consumers are becoming increasingly educated and the financial services industry has become more transparent. It is an indictment of the industry, but a sad reality that only now clients are increasingly wanting to know how much their financial planner is earning from them, and what he or she is doing to justify that remuneration. It is becoming less justifiable to earn a commission or fee simply because you provide access to a product. If that’s all you do, then Google will become your biggest competitor.

It is critical that you are able to define and deliver on the value you add to clients, but perhaps even more importantly, that you are able to articulate that value to your clients. Your value proposition could be that you provide peace of mind to your clients, or that you enable them to retire comfortably. It may be a straightforward concept, but it also needs to be articulated to clients in a simple manner in order to have the desired effect.

Could you pass the elevator test when it comes to describing your business? You should be able to articulate clearly what your business does and the benefits it provides to its clients in a 30 second pitch. It is essential that you can explain what you do, clearly and without jargon.

Some Financial Planners make the mistake of thinking that their close relationship with product providers is their unique selling point. This is not a value proposition. All Financial Planners, and increasingly clients themselves, have access to products. Rather, it is through understanding what clients need, being clear on how you (uniquely) can help them meet their needs, providing appropriate advice, finding the right solutions and delivering great service that will help you justify why clients pay you.

Having a value proposition alone is not enough. You need to have a target market to whom you deliver this. Some financial planners focus on the niche of people approaching retirement, or those who are already retired. Others may only want to deal with professional wealth accumulators.

Whatever your target market, it is critical that you are clear on to whom you are delivering your value proposition. In that way, you can be sure that it will be relevant, and something that your clients won’t mind paying for.

Currently the issue of fees to advisers and fees to product providers is still somewhat blurred but this is unlikely to remain the case. There is already a clear trend internationally towards the idea of separating the fees of financial advisers from those of product providers.

In fact, Australia is set to make this separation mandatory in 2012 with its proposed fee for service transition. Similar talks are already taking place in the US and UK and ASISA is now looking at the issue here.

Transparency and consumerism is making the separation of what clients pay for advice, product and administration an inevitability Having a clear value proposition will help a financial planner to articulate clearly not only what value they are adding but also why they are able to charge for that value.

Quick Polls


There are countless articles written about South Africa’s poor retirement outcomes. Which of the following would you single out as the biggest contributor to local savers not accumulating enough to buy an adequate and sustainable pension?


Lack of personal accountability
Poor participation in formal retirement funds
Reluctance to seek financial advice early on
SA’s high unemployment rate
fanews magazine
FAnews April 2022 Get the latest issue of FAnews

This month's headlines

The ethical core of insurance relationships
Debarment… a double whammy
A beginner’s guide to scaling the Tech Mountain
Leadership, climate and cybercrime… SA’s top risks
Unpacking the retirement reform developments
Subscribe now