Taking the quantum leap for your business

Jonathan Faurie, FAnews Journalist

With the implementation of the Retail Distribution Review (RDR) edging ever closer, advisers are facing the prospect of moving their business to a fee based model.

Many advisers are looking at this with a certain measure of trepidation because of the uncertainty it is associated with. And rightly so; many advisers have been operating on a commission based model for many years and now they have to make a radical change in the way they do business.

However, it can be done. Many advisers have already moved their business to a fee based model and have been singing its praises. One must ask the question of whether these advisers want to do it willingly and on their terms or do they want to be forced into the situation by the Financial Services Board.

Embracing change

The move to RDR does not come without significant change. Speaking at the recently held Old Mutual Roadshow, Derick Gerber, a Financial Coach and an adviser who has already made the move to a fee based business model pointed out that when he made the change, his salary initially dropped from R70 000 a month on a commission based model to R7 000 month on an advice based model. This obviously led to a significant change in lifestyle, but Gerber stuck to the course and made it out to the end of the tunnel.

There are also a few things that need to be kept in mind when going through this change. One is that an adviser or a product supplier must never speak ill of a product or another adviser. He compared the financial services industry to a brotherhood and that clients will respect you if you have respect for competitors.

“The biggest mindset change is that you need to come to terms with the fact that clients will be paying for services around advice rather than going out to sell a product all of the time,” says Gerber.

Showing your value

This is a key point that Gerber made. It is like owning a luxury vehicle; yes the major selling point is the vehicle itself (the product), but a major additional selling point is the services that one receives while owning the vehicle. The same can be said for other world leading brands such as Apple and Samsung.

But how do you articulate your value that cannot be displayed in a product? Internationally acclaimed business coach Duncan MacPherson told the audience that presenting yourself as a brand is the way in which a person can articulate their added value beyond the presentation of a product.

“Marketing is what you say, branding is what your clients hear. You need to build a brand that resonates with your clients and shows them that you are adding significant value to their financial journey,” said MacPherson.

One of the most important messages MacPherson discussed surrounded campaigns vs consistency. If you are offering a product to a client, it can be seen as a campaign as it begins with each new product. However, consistency shows involvement and interest in a person’s life.

You then also need to focus on how you are perceived by your clients. Offering them all of market advice is the easiest way to offer significant value to them beyond that which is currently offered to them. They will see you as a mentor rather than a salesperson.

Redefine your life

Gerber, told the audience that it is possible to redefine and reinvent yourself if you have a focused mind shift.

As with most important decisions in life, this move has to start with the why. Gerber spoke about his own experience and how he got to his why.

He realised that the accolades he had won over the years was based on upfront commission and was not based on the true quality of advice that could be offered to clients. He realised he wanted to move towards a fee based model because he wanted to become a key role player on the success journey of his clients.

Perhaps you are facing a similar situation? Perhaps you want to move towards a model where there is greater transparency across the advice value chain? Whatever it is, you need to find your why before you make the change.

Editor’s Thoughts:
The success of this move also hinges on the level of trust that you build with your client; greater trust will ensure that your transition is easier. The main aspect to bear in mind is that this process takes time in order to be successful.  Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.