Too many advisors are inadequately charging for their services. That is one key finding of an industry consultant offering a simple way for advisors to visualize their pricing integrity.
Pusateri Consulting and Training’s new white paper—part of a series called Pricing Your Value Unapologetically—asks advisors, simply, “How Big is Your Triangle?” With one axis each for an advisor’s value, the perception of that value and the price charged, high-scoring advisors will have a larger triangle, and similarly their triangles will appear balanced.
The whitepaper is a sequel to the first in the series, which focused on the reasons advisors undermined themselves by underselling their services and discounting fees. While that earlier paper by Pusateri managing director Giles Kavanagh defined concepts of pricing integrity, the new paper offers a tool advisors can use to picture their pricing integrity.
Charting what your triangle looks like is supposed to yield an “Aha” moment, Kavanagh writes, such as: “I do provide a lot of value to my clients. I just do a bad job of articulating it, so clients have no idea.” That would be for a tripod, one of whose axes extends into the “high” range on value, but the “low” range in perception (and, likely, low or medium on price).
Another possible “Aha,” the author adds, would be: “I rate high on Value and Perception, so the real reason I am mispriced is my own insecurity regarding my real value.”
The whitepaper emphasizes that the real driver of pricing is perception of value, so that advisors who do provide high value need to make consistent efforts to articulating that value to clients.
Advisors should not assume that clients are appreciating high-value services for merely average prices. “Buyers are not philosophers” who would parse these mismatching relationships, Kavanaugh writes. They might simply assume you are overstating your value.
The white paper examines each axis in detail. Starting with value delivered, the Pusateri paper says that, in the firm’s experience working with more than 2,000 advisors on this concept, most rate themselves above average.
The firm recommends that advisors take the trouble to produce a one- to two-page inventory of the total value they provide, which is valuable not merely as a pricing tool, but as a sales tool as well. Similarly, they need to define their service model, and be sure they are touching clients throughout the relationship and in an anticipatory way. They should also ask what they offer that is different than or better than their competitors.