What You Need to Know
- Advisors need to do a better job of articulating the value they provide to their clients, Carson Group's Jamie Hopkins says.
- Clients don't care about your compensation model, but they do care about you being transparent about fees.
- Advisors and their clients need to stick with their financial plans, but that doesn't mean sticking with all the same investments.
Here’s the reality of advisor compensation, according to Jamie Hopkins: Most clients don’t care about your business model. But they do want to know what they are paying for, and advisors need to do a better job of articulating their value.
“They really don’t care about the compensation model as much as you think,” Hopkins, managing partner of Wealth Solutions at Carson Group, said at a conference Thursday.
But he was quick to add: “They do care about transparency for what they’re getting.” In fact, clients’ satisfaction drops when they learn what they’re really paying for after they engage the advisor, he said.
During an advanced financial planning workshop at the Wealth Management EDGE conference in Hollywood, Florida, Hopkins discussed a number of ways advisors can step up their game in helping clients navigate the pandemic and its effects, including the current market volatility.
Although fee compression is an important issue, “I think the most important thing here is what is the value that we are demonstrating” to clients, Hopkins said Thursday.
But “how good are we at articulating that to clients?” he asked and then quickly answered his own question: “I think that’s actually been the part where we struggle more in financial planning is actually articulating the value that we’re delivering and the value that we’re delivering a client over” their lifetime.
Comparing advisory clients to retail customers, he pointed out that many people are willing to pay extra for more value when it comes to better airline seats, superior cars or other premium products.
‘Proactive and Not Reactive’
Meanwhile, “one area that is kind of upsetting to me today … is we still struggle in the advisory world to get in front of people before they really need our help, especially” when it comes to long-term care and health care planning, Hopkins told attendees.
“When somebody walks into an advisor’s office for the very first time [and] says, ‘I really need long-term care insurance,’ the first thing many advisors may think is it’s already too late to best help that person,” he said.
Therefore, he said: “I do believe that we have to better demonstrate our value as proactive and not reactive in all of these different areas.”