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Are You Giving Advice too Quickly?

In an effort to get prospects to buy their services, some advisors lead with free advice. But how much should you give away? What kind of advice? Should you be giving away anything at all?

To understand your value, prospects do need to know something about what you deliver. On this episode of Elementality, Reese Harper and Chad Jardine take a look at why putting your focus on the process of planning may be more effective than delivering any pieces of a plan itself.

You lose your leverage when you give things away. Prospects who begin to understand your process better understand your services. Here’s how you can get prospective clients to start anticipating your advice as you present your value proposition.

 


Podcast Transcript

Reese Harper:
So you’re just giving things away in advance, you lose all your leverage, like all your leverage is gone. I like to use the upfront process to collect information, ask tons of questions, make sure they understand my process, make sure they understand how I’m going to deliver advice, but I’m not going to give them advice until they hire me because like that’s my living.

Jordan Haynes:
Welcome to Elementality. I’m Jordan Haynes, financial planning specialist at Elements. In this episode of Elementality, Reese and Chad talk about how to show your value proposition to your perspective clients, without having to deliver a full blown plan. And how focus on the process of planning, maybe more effective than delivering the actual plan itself. As you listen, consider how you can present your value to prospective clients without to having to deliver that full plan. And instead engage in a meaningful dialogue where you try to understand and diagnose the client’s needs. Enjoy the episode.

Reese Harper:
Welcome to Elementality everybody. Here for another episode, excited to be with Chad in the studio and discover the hottest topic in the financial advisor community of the week.

Chad Jardine:
Indeed, woohoo.

Reese Harper:
It’s raining outside and I’m happy that the smoke has cleared. I’m feeling like my weekend might be a hiking weekend after all. I did hike last weekend, even in the smoke, it was better than in the valley. For those of you who don’t know, we’re in the middle of taking on every other state in the west garbage, their smoke. Utah is the perfect geological dumping ground for Oregon, Northern California, Idaho, Wyoming, Colorado. We get all of your garbage in the air. And then when we have a fire, which is rare, but we have them.

Chad Jardine:
We get to keep our own smoke.

Reese Harper:
We keep our own smoke too. And so it’s really bad. We have one of the worst air qualities in the whole world for very short periods of time. And then all of a sudden it’s beautiful. And then it goes to worse than Mongolia. And then it’s beautiful again.

Chad Jardine:
Shout out to all of you guys-

Reese Harper:
Shout out to Mongolia though. Okay.

Chad Jardine:
Yeah. Shout out to all you guys in the west coast too. If you’re experiencing fires, I hope that you’re safe. And that the only thing that we get is a little bit of smoke.

Reese Harper:
Yes. And shout out to all the people working really hard right now on these fires. I admire it very much, every night I’m watching the news right now. Just grateful for all the people that work on that stuff.

Chad Jardine:
Amen.

Reese Harper:
Onto the advisor topic of the week. What have you been hearing Chad? What’s the latest on the ground?

Chad Jardine:
Okay. This is kind of an interesting topic that Jordan shared with me this week. As advisor are building their book, the wisdom of giving part of their project away, giving a certain amount of planning away for free to prospects. Is it wise as a financial advisor to use a try-before-you-buy approach with prospects, or do you end up giving away all your value and then not getting paid for it?

Reese Harper:
Yeah. This is a tough question. So I would say there’s two camps of thought on this, and one of the camps is I’m going to have to show how much I can do in advance of someone signing up with me. That originates from a kind of, I’ll call it the Northwestern Mutual, Mass Mutual, New York life kind of model where they don’t actually get compensated for financial planning. They get compensated for transactions like selling insurance. And so quite often in order to get people to buy insurance…

Chad Jardine:
Like planning is the leader.

Reese Harper:
Planning is the leader. You kind of like set it all up. So people know, hey, in order to do this plan, because the plan is buy all this stuff, then I got to show you why it’s going to be so great for you. And so that’s my plan. Really, it’s not as much of a plan though, is it a sales deck to get people to buy product. That’s the origin, okay. Now, institutionally that’s where it’s coming from. But it also comes from planners. Even if you didn’t start at a Northwestern Mutual and you didn’t know, it also comes from a place of insecurity around, “I want to just take care of this person. I want to make sure they know how smart I am. I want to make sure they know how much I can do”.

Chad Jardine:
Is there a certain element of… If financial planning and the value proper financial planning was super well known, customers came to planners with a very clear understanding of what they were going to get.

Reese Harper:
Yeah.

Chad Jardine:
By hiring a financial advisor, do you think that would kind of settle this question that a lot of this desire to share with somebody before I’m getting paid is because I just need to educate them about the need, educate them about why they should hire me?

Reese Harper:
Well, yeah, that’s part of it. I mean, if you look at the medical profession, hundreds of almost thousands of years old now, it’s not like people are wondering what do I get when I go in to see the doctor.

Chad Jardine:
Right, right.

Reese Harper:
And I don’t need to have an explanation of that or be sold on value proposition. I’m just like, I know institutionally the value prop. The customer doesn’t know that about financial planning right now as well. I mean, this is like 30 years old, 40 years old value proposition. Right now we just don’t have enough time for them to really understand financial planning. So yes, that’s a part of it. I think that in a hundred years or 200 years later, like yeah… But it takes professions that long, these professions don’t appear overnight. They just don’t. For a job description to get put in the Bureau of Labor Statistics, it takes quite a while.

Chad Jardine:
Yeah. Yeah.

Reese Harper:
And we’re just not that old as an industry. I think the main question, what I’m really probably thinking is valuable to our audience though, is how much should I give away at the beginning. Versus what kinds of things should I be giving away as a lead?

Chad Jardine:
Yeah.

Reese Harper:
Knowing that this dynamic’s at play, that they don’t really know what financial planning is.

Chad Jardine:
Do I give the taster test at Costco version? Or do I get the whole box of Dino nuggets upfront?

Reese Harper:
Yeah.

Chad Jardine:
I hear you.

Reese Harper:
I think it’s just important to start to analyze the difference between are you in sales mode or you in advice mode, right. Because-

Chad Jardine:
Yeah, tell me more about that.

Reese Harper:
Because the customer doesn’t really understand the value proposition. Like at some point they have to be sold on this value proposition because it’s not as clear as filing your taxes. All right. This is a more contemplative sale.

Chad Jardine:
Yeah.

Reese Harper:
They need to understand a little bit more about what they’re getting before they would subscribe to a subscription for planning, or even an AUM fee or any kind of fixed fee. They’re going to have to know a little bit more. I think that where advisors probably make a mistake, in my view, is when they confuse sales with service or sales and advise. What I mean is in sales, we are talking about our process. We’re talking about the value proposition of what we’re going to deliver. We’re talking about how we work, giving maybe some examples or some case studies or some samples of content and around how we think and what we believe as a firm. Deliverables like an article or a white paper about the value proposition that we have that’s unique. So at Dennis advisors, it’s obvious a little bit more nichey and clear, but there’s a difference between that upfront sales and then telling the person something specific about their own individual situation…

Chad Jardine:
Yeah.

Reese Harper:
That you believe is something they should do, right. And a lot of advisors jump to advise, they jump so quickly to advise and the client is not ready for that yet. They will ask you questions. Their condition right now, the customer, the consumer’s condition to ask a financial question, expect an answer, largely because that’s the way the internet works. And they are expecting an answer quickly. So if they tell you something, they’re expecting you to be able to tell them something back. And even though they are asking for that, what would you do, Reese? Here’s my situation, here’s two seconds of it. I’ll give you a 20 second explanation. I want an answer. Well, the truth is, I could give them that answer. And that’s what they’re asking for, but it’s not what they really need to hear. We all know that there’s more context that we want to have before we can just give a piece of advice.

Chad Jardine:
Of course.

Reese Harper:
If we do respond really quickly though, it won’t be well received anyway. They’re going to actually go, “How would he know in just like 20 seconds? He could possibly tell me that’s the right answer for me”. They rarely go like, “Oh man, you’re so smart. You know how to give me an answer in 20 seconds”. They usually go like, “We’ll see”. In their mind, they’re a lot more skeptical of your process than they are impressed by your answer. And what I think you want to establish really quickly is when people ask you a question, you ask more questions, and you ask more questions. And the pattern of asking more questions is where they gain trust.

Reese Harper:
Because the people who can ask the most insightful questions actually are the people that are the most trusted. And you have to be really careful when you decide you’re going to just jump into advise delivery mode versus asking one more question. The sales process, if you ever get into advise, it should feel more like an unanswered question still. Because your value is the answers, but the pattern you want to establish with the client is that I only give answers after I have lots of information, and lots of questions answered, and time. I like to let time pass.

Reese Harper:
I always do this. I tell clients, even with existing clients who I know well, I’ll take 24 hours. Even if I know the answer, I’ll just say, I think I know what I’d want to do here. And sometimes I might say, this is what I’m thinking, but I’m not sure and I want to have another day to just sleep on this. Sometimes when I wake up the next day, I just feel differently or I get a new piece of information or have a new thought, and before we just move forward with this, I want to think about it.

Chad Jardine:
Yeah, yeah.

Reese Harper:
And tell them the same thing. Can you go talk to your spouse, your friend, your CPA. Run this by them, see what they think, see how they react, and let’s decide tomorrow or let’s decide the next day if we’re going to move forward on this, just take a day to think about it. That kind of like tempered approach, I think is what really allows people to feel like you’re stable. You’re taking in a lot of data. You’re tempered. You’re trustworthy.

Jordan Haynes:
A big challenge for advisors is delivering a consistent, ongoing financial planning experience to clients. Knowing what to do initially with a client is easy, but how do you consistently add ongoing value to strengthen that new relationship. The Elements of Financial Planning System is centered on key indicators of a client’s financial health. And it gives you the structure you need to deliver ongoing value through financial planning. Start by evaluating key client financial data, then deliver timely insights that are both valuable and appreciated. To learn more schedule a time to talk with us today, by going to getelements.com/meet.

Chad Jardine:
It seems that also you’re creating a certain amount of tension that drives up the emotional stakes in the relationship. By doing that, if I want you to want something, I would put it down here. And I would say, you can’t have that right now.

Reese Harper:
Yeah. And I think that in sales that’s particularly important. In a sales situation of any kind of intellectual capital sale, right, which is your brain, you’re selling your advice. You want that person to anticipate the advise that they’re going to be receiving and not feel like it’s quite on demand if they’re not a customer. Right?

Chad Jardine:
Yes.

Reese Harper:
Especially if they’re not a customer. If they’re a client and you’ve known them for a long time, I don’t usually…

Chad Jardine:
Well, it’s one thing to drag them out for no reason-

Reese Harper:
For no reason.

Chad Jardine:
If it’s just a gimmick, right.

Reese Harper:
Yes.

Chad Jardine:
You’re just wanting to reinforce that. And some, I mean, I don’t know, maybe there’s a place where that’s appropriate, but what I heard you say was, don’t be afraid to drag that out, in order to give them the full advantage of you taking some time to mow it over. Sleeping on something is kind of like code for, let my unconscious work on this a little bit, because I got a lot of information in there that I can bring to bear.

Reese Harper:
Yeah.

Chad Jardine:
And that may be that may strike people as unusual. But for me it makes a lot of sense.

Reese Harper:
I think it’s important to distinguish, are we talking about on an ongoing basis once they become a client or upfront. Jordan, I think, his question coming from advisors has mostly to do with this upfront narrative. And I think-

Chad Jardine:
Yeah, do I lay out your initial plan for you before you actually…

Reese Harper:
And I hopefully from this conversation, it’s clear. There’s lots of different ways. The freemium model is tried and true in software upselling and a lot of free software products are the route that businesses choose to go to then upsell enterprise. [crosstalk 00:14:10] That’s different with intellectual capital though.

Chad Jardine:
Yeah. I don’t know that financial planners have the tolerance for the conversion rate of freemium.

Reese Harper:
Yeah.

Chad Jardine:
Freemium has a… Do you want to give financial plans away to a hundred people to get one client?

Reese Harper:
Yeah.

Chad Jardine:
So I think that there’s a lot of-

Reese Harper:
We don’t have something to give away that’s actually that valuable on an ongoing basis like softwares.

Chad Jardine:
That’s going to hook the client.

Reese Harper:
Yeah. I mean, your advice is infrequently valued. Okay. And it’s this accountability kind of coaching that you’re going to provide.

Chad Jardine:
You’re saying you kind of hit these punctuated moments in the client’s life.

Reese Harper:
They’re very high value once a year, twice a year, kind of moments.

Chad Jardine:
So this intense value created in these moments.

Reese Harper:
Yeah. And you’re upfront value is probably the most intense trajectory point for the client in the whole relationship. Is that upfront moment when you expose a few things to them that weren’t even on their radar, right?

Chad Jardine:
Yes.

Reese Harper:
Could be as simple for… Let’s say it’s simple for a 31 year old that doesn’t have any financial background. It could be as simple as explaining the difference between how a traditional IRA and a Roth IRA is going to make a big difference in their net worth over time. Or it could be as simple as telling them that the home improvements that they just made on their house, they should keep track of all that stuff so that when they sell their home, they have a lower capital gains rate, or a lower effective capital gains tax.

Chad Jardine:
Yeah.

Reese Harper:
It can be something very small like that, or it can be something very substantial like, oh, did you realize that the way you’re funding your college plans for your kids is actually costing you money because your state has a state plan that has a tax credit associated with it. And you could make $4,000 a year just by opening different accounts.

Reese Harper:
These are all things that for a small young client could be very substantive. I’m trying to throw some like low things out there that are kind of, they’re very easy to do, but the major stuff, like career advice and the way to look at money that really helps a relationship heal. The way to invest someone’s portfolio that allows them to actually have their appropriate amount of growth. There’s big stuff. You just don’t want to like throw that out in your kind of sales consultation moment because those two or three or four things or five things are probably all you have really to go with in that first six months of the relationship. And you need time in order to keep giving more advice and more advice, and your advice is going to be infrequently delivered and it’s going to be high value over short periods.

Reese Harper:
So you’re just giving things away in advance. You lose all your leverage. Like all your leverage is gone. So I like to use the upfront process to collect information, ask tons of questions, make sure they understand my process, make sure they understand how I’m going to deliver advice, but I’m not going to give them advice until they hire me because that’s my living, you know? I wouldn’t ask a dentist to do a cleaning on me and then I’ll decide if I liked it enough to pay for it afterwards.

Chad Jardine:
Yeah.

Reese Harper:
Like I’m just going to pay them because I know the value proposition and I’m going to get the service. And if I don’t like it, I won’t go back. But like this industry has like 90 plus percent retention rate. So use this upfront moment as your point of maximum leverage to convert the client. Because if you can do that, you’re going to have them for life. And if you don’t do a good job at that, you’re just going to have lower conversion rates because people really will… They will sign up with you at a higher rate, if you withhold your advice until they actually become a customer. So I just think it’s just good business because you don’t have a hundred pitches a week. You only have a few.

Chad Jardine:
It makes sense. Makes sense.

Reese Harper:
If you can increase your conversion rate on your sales conversations by 10%, or 15%, that’s an extra five clients a year, seven clients a year for an hour average advisor. It’s a really critical thing to nail down, and it’s costing people a lot of money. And I think a lot of what we do at Elements is helping them kind of be able to shape a really powerful conversation around sales, that then results in higher rates of conversion and a better relationship over time.

Chad Jardine:
Yeah. That makes a ton the sense. Thank you.

Jordan Haynes:
Next time. On Elementality.

Hannah Moore:
There is a massive training gap because we have the old school industry, if you will. That’s training on sales, how do you find clients? They’re not training on how to actually be a financial planner, they’re training on how to bring clients in and sell them product of the day. Yes, there’s some very good work that’s done in that space. You look at those training programs, it’s not about how do you do a financial plan? How do you sit across a table from a client? How do you engage them? The purpose for all of those is to get a sale. And I get we’re all in sales, right. But when we look at what does it mean to be a financial planner? What does it mean for us to be a profession? I know we were talking about that before this. It really is, it’s about our work with how we are doing with our clients.

Jordan Haynes:
You can learn more about the Elements Financial Planning System at getelements.com/meet. And schedule a time to meet with me or one of our friendly financial planning experts. Elementality’s executive creators are Reese Harper, and Chad Jardine. Elementality is produced by Abby Morton and directed by Jordan Haynes.

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