The Advisor Value Proposition

Investors rely increasingly on low-cost online accounts, free AI tools and financial influencers. That raises a simple but pressing question: Why would clients pay the added cost of working with a human advisor?

The simple answer is the value you provide — your secret sauce.

Investors will pay for value, but only if they see it and believe it is worth the price. You need to understand how clients and prospects value your services and articulate your value proposition in a way that resonates with them.

A value proposition is a clear statement that explains the value clients get from you, compared to your competitors. It explains why a client should choose your services over the alternatives.

If you’re unable to articulate your unique value, take these four steps.

1. Define your target market

Some advisors cast their nets broadly. Others narrow their focus using one or a combination of factors: age, proximity, profession, gender, net worth or investable assets are common. Others focus on upwardly mobile do-it-yourself (DIY) investors, people near retirement age or business owners.

A combined target market might be women 30–45 who are employed outside the home and live within 50 kilometres of your office. Or you might focus on divorced C-suite men 40–55, living in your province with more than $500,000 in savings.

Consider Nick and Nancy — both in their late 60s. They retired after selling their house, which provided them with a $1.5 million nest egg. They rely on an online account at their bank, where they pay low fees.

Nick checks his account and trades every morning, including Bitcoin. Nancy isn’t comfortable with Nick’s venture into crypto, so she’s thinking about retaining an advisor. First, she’ll need to convince Nick.

Would such investors be part of your target market? If you are looking for clients at or after retirement with more than $500,000 in investable assets who live near you, they could be. But you may need to wait until the market turns for them to realize they need your advice, and if they lose considerable funds, they might no longer be in your target market.

There’s no wrong answer. As a young lawyer, I focused on the financial services industry. I targeted advisors and dealers across Canada for regulatory defence, and in Ontario for litigation defence. I have grown this practice over 20 years, to the point that it is all I do with the support of a team of associates and partners.

2. Identify your competitors

Think about competition in terms of your target market. They may include other advisors registered to sell securities and insurance (no matter the channel), online providers and finfluencers.

3. Identify your prospective clients’ problems

Ask why your current clients work with you.

If your clients are fearful, help them identify and tackle their financial fears and needs. (“I can’t even think about how much I will need to retire.”)

Perhaps they’re unable to figure out or articulate their financial goals. (“I’m 28. I want to buy a condo, and I don’t want to ever move again.”)

Maybe they’re clear about what they want but are unsure how to get there. They need a plan, and discipline. (“I want to buy a house, but I cannot save no matter how much I make.”)

Or they’re unsure how to adjust to a change in a tax-efficient manner. It could be good news, such as increased wages, or bad news, such as losing a job and needing liquidity.

If you gather the reasons your clients work with you, it will give you insight into your value.

4. Recognize how you are the ideal solution

This is the heavy lift. Keep one question in mind: are your prospective clients prepared to pay for you? If they cannot afford your services, they should not be in your target market.

Ask yourself why your clients work with you. What is your secret sauce compared to your competitors, online services and finfluencers?

Examine your assets and liabilities. Dig into your value the way a corporation values itself.

What are your greatest assets as an advisor, especially compared to DIY alternatives and finfluencers?

• Education and experience

Advisors bring an understanding of capital markets and products. You understand diversification, how to avoid overconcentration and the importance of balancing and rebalancing.

You understand complex products and the different types of risk. Continuing education requirements keep your knowledge fresh.

Finfluencers, by contrast, may promote products while being paid by issuers. Some have been caught by securities commissions, and some may recommend investments without any education or credentials.

• Knowledge and communication

The know-your-client (KYC) obligation is a gift to both advisors and clients. KYC means listening deeply and closely, and understanding their unique needs. Getting into your clients’ minds is a significant asset. Understanding their pain points allows you to help solve them. And solving family pain points can be the way to reach the next generation.

Consider Bob and Sarah, both in their mid-70s. Bob is the only one who wants to meet with the advisor. After insisting on a meeting with Sarah, the advisor learns that the couple’s adult son has serious medical issues. He lives with his parents and depends on his mom for care.

There is no plan for the son after Sarah passes. Bob has promised that he has it covered, but Sarah, who does not know the details, suspects there is no plan or that he is relying on the couple’s adult daughter, who has two small children.

This is the kind of complexity that online providers and finfluencers cannot get to the bottom of. An advisor can. By developing relationships that give you the right to ask deeper questions, you learn about the son’s disabilities and needs, and you gain an introduction to the daughter.

Solutions exist. You may need to refer the family to a social worker who they can work with to determine the costs and then you can recommend a trust or an insurance product that pays monthly after Bob and Sarah pass, assuming you are insurance licensed, or you can direct them to someone who has the necessary credentials who you can work with. The daughter can act as trustee to ensure payments are made and used for her brother’s care, alongside a plan for where he will live.

An advisor applies education and experience to unwrap and analyze these issues, uncover the client’s unique underlying stresses, solve them with a plan, and then help clients execute that plan.

• Suitability

Advisors understand how personal, market and economic changes should affect a portfolio, increasing or reducing risk.

You help when things are tough, whether the market or a client’s personal life is not cooperating. You manage different types of accounts at one time, advise which accounts or mortgage should receive contributions, diversify investments so that clients don’t put all their eggs in one basket, and determine which products are best suited to each client.

• Planning

You help clients determine their personal goals and develop a path to achieve them.

You also help clients understand how financial changes like an inheritance or job loss affect their ability to meet their goals. You adjust their financial plans accordingly.

• Putting clients first

Know-your-product obligations and product pricing are part of a regime that shows clients you care. The trusted contact person requirement is one example. And where a conflict of interest cannot be resolved in the client’s best interest, it must be avoided.

• Transparency required

Advisors are required to be transparent with clients about costs and conflicts of interest.

• Supervision by dealer and regulator

You may not like it, but supervision is a huge advantage over finfluencers and DIY online accounts. It provides value. Regular reviews and audits keep clients protected from conflicts of interest, unsuitable investments and more.

These assets are considerable. In part 2, I’ll focus on your liabilities: the risks you face when competing with low-cost online accounts, finfluencers and AI, and practical ways to turn those liabilities into assets.