FROM THE TACTICAL TO PRACTICAL- The True Meaning of Value

Have you seen those TV ads for Morgan Stanley? You know, the one where a man we assume to be the bride’s father is giving a heartfelt wedding toast–and then he turns out to be the bride’s financial advisor? How about the one where a man is peering in at the babies in the hospital nursery, bragging about the wonderful financial plan he has for the baby we assume to be his–and then he turns out to be the financial advisor to the baby’s parents?

Then there’s my personal favorite: The man and woman sitting on a beach at sunset. We assume the two people are married, but when the camera changes angles, it turns out that the man is the couple’s financial advisor, and the husband has been sitting off-camera. The advisor says, “I think if we move a few things around in your portfolio, you could afford that dream home.” You and I know the subtext: “Churn and burn, baby; I got to reach quota.” But the unfortunate consumer sitting home watching the ad thinks that the advisor is a genius and wants someone just like him.

What are these ads doing to TV audiences? Besides sending a powerful visual message, they are appealing to our conscious and unconscious values–our conscious desire for more wealth, and our unconscious desire to seek trust, dedication, and intelligence.

The commercials are arguing that this “big company” financial advisor embodies these conscious and unconscious values. The Big Company has huge marketing budgets to attach value to its advisors’ actions and win clients’ trust and their money. Why is this a challenge to you? Because you can’t reach a mass consumer audience. You have to do it one-on-one. You can’t afford to hire Madison Avenue firms to create a sense of value that explains your actions. As an independent advisor, you have to do it yourself. You’ll need to be more creative to show your value to your client.

Do you laugh this off and say, “I’m not worried–I have a better product or service!” Or are you one of those naive people who believes superior work will be recognized by its own merit? If not, are you doing something to fight back?

Unless you can show people your value, most people will take what you do for granted. If you do nothing, you run the risk of being judged and compared strictly by the activities you perform. Your stockbroker competitors have no problem in this area because their role as facilitator has connected value to their actions. I recently received the following e-mail from a broker trying to get me to become a client. He listed names of companies, along with an opinion about whether to buy, hold, or sell the companies’ stocks, and his predictions for their future stock prices:

Williams-Sonoma hit our sell list on Monday. Bought and mentioned here a month ago, the company reported same store holiday sales up 3.7%, which seemed a bit thin, and I took a very modest profit. I also sold for a better gain our stock in Interactive, which we received in a buyout of our positions in Lending Tree. The quality of the acquiring company is paramount and we achieved growing positions in HSBC Holdings (HBC-$80), the large British bank, through buying Household, the old-line consumer lender. I expect we will see an increasing number of large buyouts this year as corporations take advantage of low interest rates to expand and diversify.

His epistle went on like this for 10 more paragraphs. It was mind-numbing, and I’m sure this broker will probably earn more money on the transaction fees than I would earn following his advice. Can you see why people are impressed by this sort of thing? They have no way of assessing what’s real and what’s not.

That’s one reason the big Wall Street firms have such huge marketing departments, with hundred-million-dollar budgets inventing new products almost daily. Today, hedge fund of funds; tomorrow, the world?

Most of us base our buying decisions on cost and how much we get for our money, so we naturally equate value with activity. But when it comes to financial advice, this equation is wrong. Maybe the problem is that we have overused the word “value”–the word itself now has no value.

The Wrong Path

What many advisors do when they want to “differentiate” themselves from their competitors is to deluge customers with claims about providing more products, more functions, more frequent statements, more personalized service, and so on, and finally topping it off with some “value-added” clich?.

This unknowingly locks you into being judged based on your activities. You end up dancing ’round and ’round like one of those little poodles wearing a tutu trying to get a bone. But the bone is always just out of reach.

Experience Counts

So how or where do you provide value if not through activities? You focus on the client’s experience. Michael Lane, director of advisor services for TIAA-CREF, shared a story of his personal experience that really brought home this point. Michael recounted his recent relocation to Charlotte, North Carolina. “Since my wife and children had never been there, I wanted their first impression to be a great experience, so I splurged on a reservation at the Valentine Resort, one of the highest-rated hotels in all of North Carolina. They sent us a beautiful brochure.”

Michael had asked the hotel to ensure the accommodations would be ready since he and his family would be arriving late at night and they were bringing three children, one of them an infant. When they arrived, there was no valet and no bellman; there wasn’t even anyone behind the front desk.