The big value propositions that financial planners offer—financial planning, asset management and the recommendation of financial products (which achieve returns we have little control over)—are all undergoing rapid commoditization. So it’s becoming increasingly difficult for advisors to differentiate themselves in a crowded “me too” marketplace or live up to the unrealistic expectations of their clients.
The first step in the process of transformation is to confront the shortcomings. Advisors have become increasingly frustrated by the constraints of their current value proposition:
Performance: They are pressured to achieve a higher rate of return than competitors or indexes.
Prognostication: They are asked to predict the future of markets or the economy.
Timing: They must continually try to help clients avoid falling asset classes while capitalizing on emerging opportunities.
The consequences of this approach have harmed the life and business of the advisor. If any of the following statements describe you, you are at risk:
1. You need to constantly (quarterly/annually) prove your worth.
2. You are blamed for events and forces beyond your control.
3. You are perpetually compared with competitors and indexes.
4. You are wrong in your predictions.
5. You have to cope with clients who hold back information and assets.
6. You have too many clients.
7. You do not have enough time in your day to balance personal and professional commitments.
For advisors facing these problems, the timing for a transformation of the industry couldn’t be better, especially given the new scrutiny they face from the Department of Labor. The need for advisors to bring more substantive value to their relationships has never been more pronounced.
A New Paradigm
Each quantum leap by the industry has introduced new disciplines. In the leap from sales transactions to asset management and asset allocation, risk-profiling tools were introduced. In the leap from asset management to financial planning, probability analysis, goals inquiry and more comprehensive discovery tools came into the picture.
I am convinced the actions of the DOL are going to drive this industry toward the principles and practices of something new, what I call “ROL” (return on life) advice, as opposed to the previous paradigm, which was simply “return on investment.”
A leap forward into ROL planning is bringing the development of new tools as well—tools that measure life transitions, financial satisfaction and fiscal philosophy. Tools that help clients merge their money and lives.
Introducing The ROL Revolution
The ROL value proposition simply states: “My job is to help you experience the best life possible with the money you have.”
The approaches and the processes promoted in the past are no longer enough to persuade clients to entrust their hard-earned and easily evaporating assets to advisors and planners who cannot assure them the future will be any better. Clients are looking for professionals who will keep the promises they make-—and the profession is seeking a value proposition it can fulfill. The answer is no longer based on predicting the markets, guaranteeing returns or outpacing competing asset managers, but rather on building a life-centered financial practice.