Positioning your practice in a competitive landscape

Transcription

1 The Advisor Partnership Program (TAPP) Business Development YOUR VALUE PROPOSITION: Positioning your practice in a competitive landscape

2 THE CHALLENGE Presenting your practice to your clients is largely a matter of communicating and delivering on a relevant value proposition a clear and realistic explanation of how you run your practice and serve your clients. 2

3 THE OPPORTUNITY Demonstrating that you provide value is particularly critical in today s increasingly competitive market. An advisory relationship is based on the quality of the professional services you provide to your clients. Delivering a strong message about your value not only helps you justify your fee, but it can also give your clients compelling reasons to do business with you, rather than your competition. Every day you do many things for your clients including many that they may not even be aware of. Your value proposition details all the services you provide and helps you differentiate your practice and demonstrate key client benefits. 3

4 HOW LEGG MASON CAN HELP Your value proposition: Positioning your practice in a competitive landscape provides guidelines to help you develop an effective value proposition. Your value proposition should resonate with clients, and clearly show the links between your services and your fee structure. We re confident that clearly defining what you do and emphasising your value can lead to more informed clients, a greater appreciation for you as a professional adviser, and increased levels of business and recommendations from current and prospective clients. 4

5 What s inside Components of your value proposition 6 Developing your value proposition 8 Mission statement 9 Elevator pitch 14 Client experience 15 Wealth management services 18 Investment management process 21 Personalised service offering 24 Fees for advice 25 Delivering the message 27 The first client meeting 29 The second client meeting 30 The third client meeting 32 Throughout the relationship 34 Action steps 35 5

6 COMPONENTS OF YOUR VALUE PROPOSITION Your value proposition is the foundation of your advisory process. It should communicate how you run your practice, help your clients see the relationship between your value and your fee structure, and differentiate you in a compelling way. Your value proposition should help clients answer the following questions regarding their investments: How will you help me organise my financial affairs into a sensible long-term plan? How will you help me keep on track? How do we make sure my plan continues to meet its objectives? How will you look after my investments? How do you make sure the investment strategy continues to support the objectives of my financial plan? When developing your value proposition, make sure you believe in what you deliver to your clients and can actually deliver it. If you don t believe in it, your client isn t likely to believe it either! 6

7 The components of a well-designed value proposition include: Your mission statement/ elevator pitch Your mission statement is a brief and simple summary (1-2 paragraphs) that can be used to introduce you and your practice in conversation, in printed materials (such as the opening section of a brochure or client presentation), and on your website. An elevator pitch is a short and snappy (1 2 sentence) summary of your mission statement. Your approach to working with clients (client experience) A description of how you work with clients, what they can expect from you and what you expect from them in return, and the process of how you deal with clients at the beginning of the relationship. Your wealth management services Your approach to developing financial plans and how you involve clients in the process. Include the full range of comprehensive wealth management planning strategies you or your firm may provide, such as retirement planning, tax and trust planning, estate planning, business succession planning, charitable giving, intergenerational planning, family and income protection, education funding, etc. Your investment management process The process you use to help clients understand risk and their capacity for loss, identify their goals, determine their asset allocation, select investment managers and solutions, and manage and monitor their accounts. Your service offering A detailed menu of services that can be tailored for clients which shows exactly what they receive for their service fees. What would your clients say about you? If you need inspiration to start writing your value proposition, try looking at your practice from the perspective of your clients. What would they say about you and what you bring to their relationship with you? In the end, it s up to you to take control of this message and make sure it reflects the reality of your practice. Once you have drafted your value proposition, solicit feedback from your top clients, other key people in the business and selected professional associates such as accountants and lawyers. If you have a client advisory board, ask them for feedback as well; they can advise you on whether your value proposition reflects their perception of you and your services. 7

8 DEVELOPING YOUR VALUE PROPOSITION As you develop your value proposition, consider the following tips and techniques. Also, we encourage you to work with others in your firm for assistance and guidance. Once you ve completed all five components of your value proposition, review them together and make sure they flow logically, and make adjustments if necessary. Your value proposition is the foundation of your advice process. It plays a strong role in communicating how you work with your clients. Your value proposition should also be dynamic and be refined as your practice evolves over time. Your value proposition should be simple and straightforward. You should be able to easily explain it to both existing and potential clients in conversation. To communicate a compelling and relevant message about your practice, we suggest that you develop a brochure or presentation that describes the proposition in detail and can be used with clients. 8

9 WHAT DO YOU DO? MISSION STATEMENT Your mission statement is an overview of what you do and who you do it for. It should be a brief summary (1 2 paragraphs) that can be used to introduce your practice in conversation, in printed materials (such as the opening section of a brochure or client presentation) and on your website. It should be true to who you are and how you work with clients. 1 Please refer to the next four pages for guidelines and ideas to help you develop your mission statement. 9

10 Critique the mission statement to the right. What works? What doesn t work? How could we improve on this mission statement? Consider incorporating the following elements: Target market the type of client who will benefit from your services Concerns or issues your clients face Solutions you provide Benefits to your clients Also, try to avoid jargon and technical terms and communicate to clients in a clear and business-like style. Examples: We specialise in advising successful executives, professionals and business owners on the transfer of wealth to successive generations. Our clients receive estate planning expertise, business succession planning, disciplined investment management and a commitment to exceptional client service. I am a wealth manager. My fee-based practice emphasises personal client service combined with long-term investment planning. I focus on understanding personal goals where my clients want to go in life and what they want to achieve. My business model consists of a disciplined investment management process and personalised service offering combined with a holistic approach to wealth management. I provide wealth management services to a select group of wealthy families. I help them make more informed decisions about their money and the growth and protection of their assets and estate. I work for my clients as I would for my own family and aim to build lasting, meaningful relationships based on trust, integrity and superior client service. 10

11 Additional sample mission statements: I work primarily with software development experts and business owners as their personal chief financial officer to help them achieve true financial independence. My specialty is executive remuneration management, including detailed estate and financial planning strategies particularly to manage annual bonus payments and the proceeds of a range of share schemes. I believe in building client relationships for the long-term, guiding you through the stages of wealth accumulation and protection with a plan, helping you meet your financial objectives and bringing you closer to reaching your main life ambitions. We do three things for our clients and expect one in return. We help them: simplify their financial lives and achieve their ambitions generate the necessary income to sustain the lifestyle they require now and in retirement build a legacy for following generations or charitable causes What we expect in return: should our clients have a question on anything pertaining to their finances, we expect to be the first phone call. We want to be your first choice as a financial adviser. We provide, manage and communicate the complexities of employee benefit packages and services to the directors and employees of the business. We mainly work with medium sized firms (150 1,000 employees) and will bring additional expertise and capacity to the Human Resources and Finance functions thereby enabling them to concentrate upon their core specialist activities. For clients with uncomplicated circumstances we provide straight-forward financial advice to make sure you have the right products for your future needs. You can come back to us at any time for review and buy additional products or investments, if necessary. We provide financial consultancy for business and private clients with complex affairs. We work with other professionals to create and manage a comprehensive and evolving plan. Attention to detail and ongoing service ensures that the plan is maintained, tax efficient and reflects changes in circumstances. We guide our clients, helping them preserve and grow their assets over multiple generations. To achieve this, we provide sound advice, tailored investment strategies, and highly personalised service. 11

12 Examples of specific groups or types of clients to provide focus if you do not have a clearly defined target market: Successful people Individuals, families, professionals and business owners including select groups of high net worth families Professionals Doctors, dentists, lawyers, bankers, city traders, computer specialists, footballers and rugby players Business sectors Information technology, sport, marketing and advertising, print and publishing, media and service industries Businesses Often defined by sector (as shown to the left) but also by size, number of employees, turnover and profit, recruitment policy (attitude toward employee benefits), acquisition activity Life stages and life events Pre-and post-retirement, midlife (often linked with redundancy services), retired and older age, divorced, family provider, personal injury litigant, will writers and tax planners Specific groups requiring a specific service Pension scheme wind-ups, trustee investors, people with over 1mn to invest, pension transfers, nursing home fees, education funding, etc. Additional tips Think about the types of clients you work best with Think about what business model works best for you Write down the words/phrases that describe the solutions you provide 12

13 Additional phrases to consider: Additional words to consider: We limit the number of clients in our practice so that we can provide a completely personalised service so that each of our clients has the best possible experience. We provide wealth management services that may ease clients fears of financial loss and help them retire comfortably. When investing money, we ensure three things: that we establish a process for communication between us, that we seek to manage risk in your portfolio, and that we regularly review and update your plan. Our greatest satisfaction comes from working with clients for many years and helping them realise their financial ambitions. We believe in long-term relationships and work to earn your continued trust. We offer comprehensive, objective financial advice to clients who desire a high level of personal service. We act as your advocate in all wealth matters Quality of life Comprehensive approach Tailored investment solutions Superior client service Results-oriented Accountability Accuracy Certified Commitment Common sense Comprehensive Consequences Efficiency Efficient Independent Integrity Long-term Mission Objective Passionate Personalised Realistic Rejuvenate Reliable Renew Respect Results Revitalise Solutions Tailored Trust Unbiased 13

14 WHAT DO YOU DO? ELEVATOR PITCH Your elevator pitch should be a short version (1-2 sentences maximum) of your mission statement. It is how you sum up what you do and how you do it the words and phrases you may use with a prospective client when you close the introductory meeting with them. 14

15 CLIENT EXPERIENCE Your approach to working with clients should provide specific details of how you envision working with clients both at the beginning and throughout the life of the relationship. These details should be presented in a way that will help clients visualise how this relationship will work. If you can effectively define this, you will set expectations with your clients and you will also create a roadmap for how you want to run and grow your practice. Ensure that you cover both your wealth management and investment planning processes. 2 Charts and pictures are a powerful way to illustrate the experience you provide. The examples provided on the following two pages may help you to create your own. 15

16 Sample 1 The client experience We have a clear process to understand your goals and develop appropriate recommendations. Client meetings Plan design, implementation and review Discovery meeting: Initial meeting to understand your needs Analyse requirements and evaluate options to design wealth management plan and investment strategy Recommendations meeting: Presentation of recommended wealth management plan and investment strategy Begin ongoing execution of wealth management plan Execute investment strategy and other recommendations 6 month follow-up meeting Regular review meetings: Ongoing monitoring of investment strategy and wealth management plan 16

17 Sample 2 The client experience We have a clear process to understand your goals and develop appropriate recommendations. Client meetings Plan design, implementation and review 1 Discovery meeting Identify your goals, values, ambitions, special concerns/ challenges and attitude to risk 4 Recommendations meeting Wealth management plan and investment strategy recommendations In-person meeting to present recommendations and discuss options 7 Six-month follow-up meeting In-person meeting to discuss: Initial progress First statements Schedule first full review meeting 8 Regular review meetings Ongoing monitoring of wealth management plan and investment strategy 14 days 28 days 21 days 180 days Ongoing Develop comprehensive wealth management and investment strategy Comprehensive financial plan and investment strategy Retirement planning Tax and trust planning Income and family protection Education funding Business succession planning Charitable giving Estate planning 6 Develop investment strategy Determine risk tolerance Identify tax wrappers Analyse current investment portfolio Develop asset allocation strategy Portfolio construction Begin ongoing execution of wealth management plan Organisation of paperwork Set up online account access (and review online resources) Develop schedule for future review meetings Execution of investment strategy Open new accounts Transfer existing assets Conduct trades to execute agreed-upon investment strategy 17

18 WEALTH MANAGEMENT SERVICES For this section of your value proposition, consider how you are defining your comprehensive wealth management service. You may be part of a team where other advisers have developed different areas of expertise. Or, perhaps you are a sole practitioner and you work with other advisers or professionals, as appropriate. 3 It is important that you explain your approach, emphasising your areas of expertise such as particular types of clients or areas of financial planning. You may wish to consider the following list of wealth management services as you create this part of your value proposition. Comprehensive financial planning Retirement planning Tax and trust planning Income and family protection Education funding Business succession planning Charitable giving Estate planning You may also provide a more straight forward or transactional service for clients who do not need your full wealth management service. This may be more product or fund-related and may not involve regular reviews as a matter of course. Your decision on whether or not to work in this part of the market depends upon your existing client bank, your ability to make a profit from a lower value client group and the ease with which you can deliver an appropriate level of service. You should consider use of web and telephone based services as a means of delivering consistent and high quality service at affordable fees. Charts and pictures are a powerful way to illustrate your wealth management services. The examples provided on the next two pages may help you to create your own. 18

19 Sample 1 Comprehensive wealth management services We have in-depth experience in financial planning and investment management, but we also bring in professionals with the expertise necessary for a successful wealth management plan. We will also work with any professionals with whom you already have a relationship. Name of firm Your name/team name Estate planning Comprehensive financial planning Tax and trust planning Retirement planning Client Income protection Charitable giving Business succession planning Education funding Family protection 19

20 Sample 2 Comprehensive wealth management services We have in-depth experience in financial planning and investment management, but we also bring in professionals with the expertise necessary for a successful wealth management plan. We will also work with any professionals with whom you already have a relationship. Your name/team name at XYZ Firm Comprehensive Financial Planning Retirement Planning Family Needs Planning Estate Planning Business Succession Planning Executive Compensation Management Business and Personal Protection Lifestyle review and income requirements Lifetime cash flow analysis Risk review Work based pension benefit assessment State pensions and/or social security benefit analysis Beneficiary review Education planning Planning for support of aging parents Family protection Income protection Wills Power of attorney (POA) Trusts Estate tax funding Gifting Charitable giving Liaising with family, as required Business needs review Cash management and capital needs assessment Business valuation Succession plan documents Succession plan funding Specific tax planning Share option scheme strategies Managing annual bonuses Estate and financial planning (particular to executive compensation management) Managing pensions and investments for tax efficient capital accumulation Family and personal protection Life insurance Long-term care Income protection Business protection Keyman insurance Healthcare and older age provision 20

21 INVESTMENT MANAGEMENT PROCESS Your investment management process should describe the approach you have developed for the investment aspect of your advisory service. You should present this to clients even if you out-source to an investment specialist. It can include everything from identifying your clients goals and objectives, to portfolio construction, to making adjustments in the strategy. As you develop this part of your value proposition, consider the list of activities below, as well as any other elements you include as part of your process. 4 Choose and combine activities that are part of your process to develop this essential part of your value proposition: Establish goals and objectives Determine risk tolerance and capacity for loss Develop an asset allocation strategy Develop a comprehensive strategy document (a financial blueprint that details client goals and the recommendations that will be implemented). Select tax wrappers, funds, other solutions and platforms Customise portfolio (i.e., to take into account concentrated stock positions in the company in which clients are employed, to prevent them from becoming over-exposed to their own company stock) Evaluate managers and monitor performance Monitor changes in the market and/or the economy that could potentially affect risk/returns Rebalance portfolios Adjust portfolio and investments, if necessary, to address changes in goals or lifestyle Harvest tax gains or losses Charts and pictures are a powerful way to illustrate your investment management process. The examples provided on the next two pages may help you to create your own. 21

22 Sample 1 Investment management process To help achieve your financial goals, we employ a disciplined investment management process. Monitor progress and make necessary adjustments 6 Execute investment strategy 5 Portfolio construction: select tax wrappers,other solutions and platforms 4 Develop asset allocation strategy and investment strategy document 3 Determine risk tolerance and capacity for loss 2 Establish investment goals and objectives 1 22

23 Sample 2 Investment management process To help achieve your financial goals, we employ a disciplined investment management process. Evaluate progress of portfolios and recommend adjustments in accordance with IPS Establish portfolio objectives and risk parameters Conduct cash flow analysis and long term income requirements Monitor and measure portfolio performance and attribution Evaluate & review Client wealth management plan Analyze & plan Develop investment policy statement (IPS) Construct investment portfolios Assess & construct Design & research Design strategic and tactical asset allocation models Assess macroand microeconomic trends and outlook for global capital markets Conduct rigorous due diligence using institutional-quality analytics Please note: This graphic represents a much more complex investment management process and should only be utilised by advisers who employ more sophisticated investment solutions. 23

24 PERSONALISED SERVICE OFFERING This relates to the service that you provide as part of your delivery of wealth and investment management. Creating a great client experience can be a true differentiator for your practice. 5 Think about exceptional service experiences you have enjoyed. What was it about that experience that you responded to and could you create this in your own practice? While you want your service to have a personalised feel, be careful of over-customising service because it is important to treat clients consistently. It is also essential that you deliver on your service promise and do what you say you are going to do. As you develop this next section of your value proposition, choose from the list of key services below, adding others that you provide, if appropriate. Examples: Periodic client reviews either face-to-face or remote Comprehensive communications and performance reporting to support the review process Timely research and updates on market or economic trends Personalised communications (i.e., portfolio manager insights, research reports, news on specific stocks) Opportunities to attend financial and investment education events and seminars Access to adviser and team, either remote or face-to-face Facilitate family meetings to cover intergenerational issues Act as a liaison to other professionals (accountant, lawyers, et. al) Personalised delivery of information (phone, , Web, in person) 24

25 FEES FOR ADVICE The introduction of adviser charging will increase competition and it will be some time before the full effect is realised. In the early stages, most advice firms used percentage of monies invested as the basis for charging which is slowly being replaced by a mix of project fees (fixed charges or hourly rates) and percentages. In many cases, the cost of the initial work is assessed as a project fee with implementation and ongoing service continuing to be based on percentages. In the long run, it is expected that percentages will decline in use because pressure from clients and the regulator will require advisers to show a clear relationship between what is being charged and the work undertaken. It is also expected that 1% charges (e.g., 1% of assets under advice) for ongoing service will come under pressure and that an increasing number of clients will want to be satisfied with the quality and breadth of service they are receiving. 25

26 When setting your charges, you should consider the following: What is the cost of delivering service both initial work and ongoing service? How does the cost differ for different types of service (e.g., transactional vs. full wealth management)? What is the minimum level of revenue that will cover costs and contribute to profit? What do I specifically include as part of service and what should be separately charged for? What are the boundaries of my standard service offer? If I am using percentages as the basis for most of my charging, how will I charge for work that should be based on project fees or hourly rates? What is the total cost to the client including fund and platform charges as well as adviser fees? Does this seem reasonable in the context of a low return and low interest rate environment? Where should I set my decency limits to ensure that my charges are fair for clients with small and/or very large sums to invest? What are my competitors charging and how does their service differ? How do I compare to online services (these are obviously different from face-to-face advice, but clients will use them as points of comparison)? If I am currently charging around 3% for initial work and 1% for ongoing service, how would I adapt my client proposition and business model if competitive pressure cut these charges by 50%? Are my charges consistent with other advisers in the business and my company s policy? How do I answer the client question: What do I get for my money? Does my value proposition and the way I communicate it substantiate my charges would I be seen as good value for the money? Clearly these questions are designed to test the robustness of your pricing model and how it will stand up to increased client scrutiny. Many firms have a misconception that the main impact of introducing adviser charging is over. Therefore, they fail to recognise that competitive pressures around the price of advice will build steadily over time. As with many regulatory initiatives, the main changes can be far reaching and emerge some time after their initial introduction. In these circumstances you should: Review your prices every six months, take into account your clients reactions as well as your operating costs; Monitor prices charged by online services because many clients will use these as points of comparison even though the service differs from yours; Monitor the exact charges being applied on a clientby-client basis and compare with other advisers in the business where possible this is to identify common trends and the extent to which any discounting is taking place; Continue to work at the communication of your value proposition because this is the principal way that you can substantiate your price; and Continue to work up specific examples and case studies to demonstrate the direct value that you bring and, in many cases, the tax savings you have achieved for clients. 26

27 DELIVERING THE MESSAGE Having created your value proposition, the next step is to communicate it to your clients. It is essential that you can explain your value proposition to clients in a consistent and compelling manner. Your mission statement/elevator pitch should be committed to memory and delivered consistently in a natural and effortless way. If you are a member of a team, you should make sure that the other advisers and staff can also articulate it in a consistent fashion. Also, consider how you are going to deliver your value proposition through internal processes and disciplines. It needs to be more than spoken or written words. Your entire business model and client experience should be driven by your value proposition. 27

28 The gold standard for communicating your value proposition Your brochure If possible, your value proposition should be the centre-piece of your service brochure (or client presentation) that can be used during meetings with prospects and clients. A professionally-designed and well-written brochure is truly the gold standard for marketing your practice. The core of the brochure should be your value proposition, with additional information on the key attributes of your firm. It should also include biographies for you, and, if applicable, your team. In addition to professional achievements and credentials, your biography may also include some general information about your family and personal interests. Consider graphic illustrations in some areas (e.g., a visual description of your investment management process). Your website A good website validates you in the eyes of clients and prospects. Think of it as a showroom for you and your services that is open 24 / 7. Make sure you include every element of your value proposition on your website. Your LinkedIn profile If your Compliance policy allows, create a LinkedIn profile. Your profile should provide information visitors need to recognise your professional capabilities as an adviser, as well any personal interest that could spark a connection. We recommend that you use your mission statement in the Summary section of your LinkedIn profile. Differentiating the communication of your value proposition Communicating your value proposition is not a one-time occurrence. It continues over the entire period of the relationship and should be revisited every time you meet with your client. It is very important to remind clients of the value that you bring to them. For example, let s consider the hypothetical meetings you might have with a prospect when attempting to persuade him or her to become a client. Assume three hypothetical meetings in which you conduct a discovery meeting, present your recommendations, and secure the client s agreement. How do you communicate your value proposition in each of the three meetings in a way that is meaningful and relevant? 28

29 THE FIRST CLIENT MEETING Discovery meeting: Present and explain your value proposition The aim of the first meeting is to understand as much as possible about the client and his or her objectives. It is also an opportunity to educate your client on how you run your practice and work with clients. Use these steps as a guide to focusing your first client meeting: Present your value proposition. Make sure you take them through your entire value proposition, including your mission statement, your approach to working with clients, your wealth management services, your investment management process, and your service offering. Emphasise the manner in which you run your practice and the key benefits of working with you. This is a great time to use a brochure or client presentation to help you tell the story. Explain the basis of your fee structure, but defer any specific discussion about fees until you are clear about the client s requirements and the breadth of work involved. Explain that you will put together a tailored proposal for them and that you will explain the precise charges in detail at your next meeting. If the client asks why, explain that you need to review the amount of work required before you can set the fee. Conduct an in-depth discovery process. Make sure you gain a detailed understanding of their current financial position, including their needs, risk tolerance, and short- and long-term goals and objectives. Emphasise your role by taking the process beyond establishing basic objectives and suitability to gaining an understanding of their lifestyle, including personal and family information, assets and liabilities, what motivates their buying decisions, cash flow and more. Make sure that you ask needs-based and values-based questions. Please be sure to follow your firm s advice process and approval process, if applicable, for any confirmation letters or agendas that you send. This information will provide you with a more comprehensive view of the client and help you develop relevant wealth management and investment strategies and solutions to be presented at subsequent meetings. The ultimate goal of this discovery process is to gather enough information to develop a comprehensive financial plan and investment strategy (with goals and objectives, risk tolerance, asset allocation strategy and recommendations) for your next meeting. If you use discovery tools provided by your firm, be prepared to supplement them with your own additional questions if there are areas of interest not specifically addressed. 29

30 THE SECOND CLIENT MEETING Recommendations: Demonstrate your value proposition As you have introduced your role and value proposition in the first meeting, you can validate it with a tailored proposal and set of recommendations in this second meeting. The proposal should be comprehensive and should also include an explanation of your fee structure and recommendation for ongoing service. To communicate your value proposition in this second meeting, consider the following approach: In our last meeting, we discussed in detail how I run my business, including my wealth management services, investment management process, and service offering. Today, as we go through your tailored proposal, I am going to bring those words to life and demonstrate how this process applies specifically to you. 30

31 Recap objectives and goals This plan will include the strategy and recommendations for achieving the goals that were discussed in our previous meeting. Bring your investment management process to life Discuss risk tolerance, asset allocation strategy, fund selection and advisory platform. Explain in detail the strategy you are recommending, and the various investment solutions that are appropriate to it (e.g., active or passive funds, packaged solutions, discretionary management, exchange-traded funds, mutual funds, fixed income, alternative investments and cash), and the rationale behind your approach. Investment funds and managers: Describe your firm s due diligence process as it relates to selecting funds and managers. One way to illustrate the rationale is to develop a matrix of funds whose styles complement one another from a risk and return perspective. Detail the ongoing service that you will provide the client Discuss specific expectations for service, including the client review schedule. For example, you may offer clients who don t live in your area greater flexibility around scheduling meetings. In determining what your service includes, be careful about over-customisation; make sure your practice can support the promises you make to the client. It is important to agree the frequency of reviews at this initial stage. Provide transparency about fees The more transparency you provide to your clients about your fee structure, the more confidence you instill that your fees are appropriately structured and that discounting is unnecessary. Keep these other points in mind: Detail your fee structure. Be clear about how your fees are structured and stick to the firm s policy. If you charge a single fee, for example, explain how it is calculated. If your fees are unbundled, discuss the components, such as the advisory fee and the various aspects of the investment management fee and make sure you relate your fees to the specific benefits that the client requires. Explain fee breakpoints. Your clients should understand how your fee is calculated. For example, if you tier your fees based upon monies invested clients should understand that the greater the number of assets under management, the lower the percentage fee. (This may prompt your client to move additional assets to you). Refrain from discounting. Resist the temptation to quickly discount your fee to ensure you secure the business. In fact, if you believe in your value proposition and your service offering, you should feel comfortable that your fee adequately reflects those standards. If your client expresses any doubt about your role, your value or the services you provide, address these concerns by restating your value proposition or asking if there is any part of your overall service that they do not require. 31

32 THE THIRD CLIENT MEETING Securing agreement: Deliver on your value proposition It is sometimes the case that only two meetings are required and that the content of this third meeting may be covered at the second meeting when you deal with recommendations covering solutions and ongoing service. During the third and final meeting, you should anticipate securing the client s agreement and setting up their account. During this meeting, you will re-enforce your value proposition by beginning to execute and deliver on service standards. Once again, remind them of your value proposition. Consider the following approach: As we have discussed in our previous meetings, service is a cornerstone of my business. Today, I am going to begin to execute and deliver on the service standards that are part of that promise. 32

33 Finalise paperwork Prepare as much of the paperwork in advance of the meeting so that you can quickly dispense with it. As you move through the paperwork, confirm your client s understanding and acceptance of your recommendations. Use this time to also answer any additional questions your clients may have about goals, strategies or the investment process. Begin to execute service standards Discuss expectations for statements, mailings and other types of communications your client will receive. Show your client a sample statement and explain that you will discuss the client s first statement during the initial review meeting and will use that time to explain the various components, such as performance, holdings, asset allocation, value of investments, activity, and so on. Set up a client review schedule. Schedule your first client review during this third meeting. Explain that the first review meeting will be an important opportunity to go over all of the communications they have received and explain the different components of the account statement. For ongoing review meetings, you and your client can schedule these according to individual needs and preferences. Discuss needs, and make sure you are both in agreement as far as expectations for reviews and communication. Set expectations for any additional actions. For example, you may need to be in contact with your client s lawyer or accountant on any wealth management strategies you are proposing. Or, perhaps you want to begin building a relationship with their other advisers so that you can liaise with them, as required. Ask for referrals. This is an excellent time to inquire about any other individuals that the client feels may be able to benefit from the services and products you offer. Note: It s critical that you adhere to your agreed review schedule. If you don t, it sends a strong message that you are not delivering on the value message you initially communicated to your client(s). Skipping reviews will not be acceptable to clients who are paying a fee for advice, and it may prompt them to leave you for another adviser or online service. 33

34 THROUGHOUT THE CLIENT RELATIONSHIP We recommend that you reiterate your value proposition at every client meeting throughout the relationship. This is even more critical during volatile markets. Remind your clients of the comprehensive advisory relationship you provide and the benefits they receive as a result. In addition, on an annual basis, you should reassess your value proposition to ensure that it accurately reflects your role and the way you run your practice, and make any necessary adjustments. Encourage team members to be active participants in the process and use client feedback wherever possible. Are you what you say you are? Designing a value proposition is one thing; fulfilling it is quite another. Ultimately, the only way to know how well you are delivering on your value proposition is to ask your clients. Take some time during your client reviews to explore how they perceive your process, philosophy and service. Ask them for suggestions, if necessary, on how you could enhance your level of services. If you have an advisory board, consider asking board members for feedback or ideas on how you can effectively communicate your value to your clients. In addition, run market surveys for newly acquired clients as well as those in receipt of ongoing service. 34

35 ACTION STEPS Systematise your approach Develop your value proposition or reassess your existing one using the enclosed workbook. As you develop your value proposition, solicit feedback on it from your Legg Mason Sales Representative, managers, mentors, peers or your advisory board, if applicable. Make adjustments, as appropriate, based on feedback. Create a brochure or client presentation to communicate your value proposition, following the guidelines from your firm s compliance and marketing departments. Make your value proposition the foundation of your website, and if applicable, your LinkedIn profile page. Be sure to communicate a consistent message. If you have any questions about developing your value proposition, please call the Legg Mason Sales Team at or your Legg Mason Sales Representative. 35

36 INDEPENDENT EXPERTISE. SINGULAR FOCUS. Brandywine Global ClearBridge Investments Legg Mason is a leading global investment company committed to helping clients reach their financial goals through long-term, actively managed investment strategies. Martin Currie Permal QS Investors Royce & Associates Western Asset A broad mix of equities, fixed income, alternatives and cash strategies invested worldwide A diverse family of specialised investment managers, each with its own independent approach to research and analysis Over a century of experience in identifying opportunities and delivering astute investment solutions to clients leggmason.co.uk youtube.com/leggmason The Advisor Partnership Program (TAPP) Our Experience. Your Potential. The Advisor Partnership Program (TAPP) is Legg Mason s landmark value-added offering, featuring a wide range of multidimensional workshops and seminars that empower financial advisers to build successful practices and educate their clients. TAPP delivers value in four areas of importance to advisers: their business, their knowledge, their skills, and their clients. Business Development showcases reallife insights into practice management; Retirement offers a wide array of resources for advisers focused on retirement plan business; Professional Development presents sophisticated and innovative techniques to sharpen individual skills; Client Resources provides resources that help advisers inform and educate their clients. This information is only for use by professional clients, eligible counterparties or qualified investors. It is not aimed at, or for use by, retail clients. Please note that all references to third-party corporations and Web sites do not constitute a recommendation or endorsement by Legg Mason Investments (Europe) Limited. Opinions expressed are subject to change without notice. Financial advisers should consult their own firm s policies and procedures before applying and ideas presented in this document. This material is not intended for any person or use that would be contrary to local law or regulation. Legg Mason is not responsible and takes no liability for the onward transmission of this material. Issued and approved by Legg Mason Investments (Europe) Limited, registered office 201 Bishopsgate, London, EC2M 3AB. Registered in England and Wales, Company No Authorised and regulated by the UK Financial Conduct Authority. The Advisor Partnership Program (TAPP) is a registered trademark of Legg Mason Investor Services, LLC Legg Mason Investor Services, LLC. Member FINRA, SIPC UKXX /14