Price is what you pay, value is what you get

If financial advice can substantially improve your clients’ financial situation and build a more prosperous retirement, why aren’t more of us seeking advice? For many, they baulk at the cost. But if financial advice wasn’t good value, why is it that millions of Australians do pay for it?

Simply put, your clients value the advice you provide as it meets a particular need – and the benefit is greater than the cost. For some, value comes from those intangible benefits, such as sleeping better at night, while for others value lies in the more tangible benefits, such as tax minimisation, above average returns or low fees.

What do your clients value?

Our whitepaper, ‘The true value of advice’ found those who receive financial advice were 21 per cent more likely to have greater peace of mind and 19 per cent less likely to argue with their partner. This peace of mind, however intangible, is what many people are willing to pay for.

For other people, the value lies in the tangible financial benefits – dollars saved or extra dollars earned – as they are easier to identify and measure. A conversation about saving $5,000 after consolidating insurance policies or a high-yielding investment strategy based on an in-depth knowledge of the investment landscape are often easier conversations to have with clients.

Importantly, when the time comes for a fee discussion, your clients should be left to make their own judgement on what ‘value’ is. Rather than leading with the vague and intangible term ‘value’ when discussing fees, it will be more useful to provide the full list of services you offer and clearly show why your fees are a fair reflection for those services.

If you include intangible benefits of advice, such as counselling against destructive client behaviour, as a part of your conversation with clients, it’s important to be specific on how this is a service which adds value to their portfolio.

Low fees are important too

Despite the many obvious benefits of financial advice, it’s inevitable that some clients will look at cost as the yardstick of value. That’s why it’s worthwhile to find simple ways to reduce the fees your clients pay. Here are a couple:

  • Investing - consider enhanced passive investments which allow a fund to deliver returns above traditional benchmark indices, but thanks to objective, rules-based methodology, at lower costs than a pure active fund.
  • Fee aggregation - choose a platform which lets clients reduce their fees by linking multiple accounts so they can be treated as one for administration fee purposes. This is a great way to help clients limit the amount of administration fees they pay, whether that’s for wealth transfer across different generations of the same family, or the introduction of the new $1.6 million balance cap.

As investors become more cautious about their spending, having a clear link between your fees and the services which provide value will become more important. For some clients finding a way to offer lower fees will be crucial, but remember – cheaper financial advice doesn’t make it better, it’s just cheaper, and without value it’s still expensive.

IOOF Pursuit Select offers Fee Aggregation that allows you to link up to four accounts of immediate family members. Immediate family members include husband, wife, son, daughter, de facto, partner, father, mother, brother or sister. Fee Aggregation is also available for same-sex couples and one person may link all their accounts i.e. Personal Super, Pension and Investment.

For more on IOOF Pursuit, please visit or contact your IOOF Client Solutions Manager.

The information contained in this newsletter is provided on behalf of the IOOF group of companies and is intended for financial adviser use only. It is given in good faith and has been prepared based on information that is believed to be accurate and reliable at the time of publication. Any examples are for illustration purposes only and are based on the continuance of present laws and our interpretation of them at the time.