Define your value and your value will define your client's financial wellbeing!
Is your value proposition guiding your client to financial wellbeing?
What is financial wellbeing, you may ask. It can be defined if we firstly grasp the concept of wellbeing on its own. Wellbeing refers to being satisfied with life in general, having a sense of purpose, functioning well, and feeling in control of one’s life.
Interestingly though, according to the philosopher Aristippus, all human beings are constantly in pursuit of happiness, and everything we do is aimed at achieving a state of happiness. His philosophy is supported by what psychologists call hedonic adaptation. This refers to people adapting to a change in their circumstances and psychological state, which then leads them to want the next best thing that will give them a happiness fix. This is like a treadmill that never stops and can never quite satisfy a person. Now, although happiness is a subset of wellbeing, happiness itself is not what wellbeing is.
So, let's bring this back to financial wellbeing.
When the outcome of the financial advice proposition links a client’s money to what gives them purpose in life, helps them feel in control of their financial affairs, and allows them to enjoy life, it makes financial advice more valuable as it helps them achieve what we as human beings are constantly in pursuit of – a state of wellbeing.
It turns out that money is one of the most important contributors to wellbeing. Research conducted by a psychologist by the name of Netemeyer found that financial satisfaction plays a prominent role in the overall wellbeing of people. The question we as financial advisors need to ask ourselves is: does our advice proposition help clients experience this state of wellbeing?
If you can articulate the value, you offer well, you can not only differentiate yourself from your competition, but also have better conversations with your clients.
What is a value proposition?
A Value proposition defines the value that a client experiences from what you offer. It describes how the clients’ life will be better off after their dealings with your business. It is to understand what the substance is of your offering and describes what the problem is that you solve for clients. Learn more about value propositions in our webinar
The clients’ experience of value happens in their thoughts, feelings and emotions. They evaluate the interaction they have with your advice, your services, with your team and their expectations and compare that to the rational, psychological and sensory benefits they believe they received. Only if the benefits in their opinion exceed the total cost will they feel that they received value out of the relationship. The FSP can control the value experience by proactively creating a value expectation through a well-defined value proposition.
Benefits – The benefits answer the question: What’s in it for me? The client needs to know what your offering will do for them. What are the advantages they will get?
All too often businesspeople will develop products and services that deliver benefits that the client does not want or need. Your offering can only have value for the client if it is something they deem to be important. If something is important and has a significant implication for the client, they will deem it to be worth something.
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CUSTOMERS ATTACH VALUE TO A PRODUCT IN PROPORTION TO ITS
PERCEIVED ABILITY TO HELP SOLVE THEIR PROBLEMS OR MEET THEIR NEEDS.
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PROF THEODORE LEVITT
Value can therefore be increased by a number of ways. Either benefits can be increased, the total cost reduced or both. It is worth mentioning again, if a client cannot clearly see the benefits they receive from the FSP, then they will default to the price they pay for the offering. There's a very useful template you can download to start to design your value proposition.
If you are therefore convinced that establishing financial wellbeing for your clients is important, then you should ultimately revisit your value proposition.