Most people misunderstand marketing. It’s usually thrown in with sales and assumed to be just another way for a company to sell you whatever it is they’re selling.
The truth is, marketing is the natural evolution of the standard sales approach. Henry Ford, when referring to colour selection on the Model T, said, "Any customer can have a car painted any colour that he wants, so long as it’s black."
Today the consumer is king: The sheer number of possibilities is mind boggling. If you go into a retail clothing store today to buy a pair of jeans, you quickly realize the days of single wash Levis 501s are over. You have a selection of washes from faded out to almost black. You have straight cut, boot cut, tapered fit, and skinny jeans.
Go to a restaurant today to order a burger: Whole wheat, regular, or gluten free? How would you like it cooked? Fries, salad, or half and half?
In virtually every industry, the range of selection, and ability for people to have an active role in the process, has increased exponentially.
Financial services is no exception. The delivery systems, investment choices, fee or cost options, and service levels are all part of the decision making process, or at least they should be.
For many in the full service side of the industry though, there is still a desire to offer clients not necessarily what they want or need but what is best for them to offer. This attitude tends to go with the cookie cutter approach to wealth and financial management. The one size fits all solution.
As clients become more knowledgeable about their options, they begin to ask more questions and want a more detailed, transparent approach to help them make decisions. They want to know all their options, and the best solutions for them.
Unfortunately, taking time to do the back work and produce a proposal that helps clients make decisions eats into the profitability of the old practice models. As they say, time is money.
I remember a conversation with a friend of mine after the 2008 market meltdown. We would often debate the industry and the markets, and while she was only involved as an investor, she enjoyed the conversation.
Her comments have stayed with me. She said that prior to 2008, we were willing to pay an advisor fees because we believed he could protect us from an event just like 2008 event.
After going through the correction, we realized that no one has the ability to protect us, it’s just a question of managing the risks, not avoiding them. This begs the question - why should we pay these fees if advisors can’t protect us from the markets?
The short answer is that managing your financial future is about more than absolute returns. Certainly there are steps one can take to minimize the downside of the markets, but the price is lesser upside.
Having a successful retirement isn’t only about money. It’s about lifestyle, health, accommodations, personal legacy, social networks, and interests. It’s about the peace of mind that comes of knowing you have yourself on track.
There are many people in the industry who understand this shift, and they have created processes to make sure that not only are their clients well informed, they are also comfortable with the solutions. Clients have become part of the process, and understand why they’re investing their money the way they are.
The discussion should start with, “What is it you’re looking to achieve? What kind of lifestyle would you like to live? What are your hopes and dreams?”
These are all legitimate questions when planning your financial future. It doesn’t guarantee you’ll get to where you want to go, but it does increase the likelihood. It also gives you a clear picture of what it is you need to do.
Selecting the right investment products shouldn’t centre around, “What was the best performer last year?” or “Which fund has the lowest MER?”
Don’t get me wrong, those are important factors, but they must be taken in context with considerations such as your time frame, risk parameters, income needs, the amount of participation you want to have, reporting expectations, and financial situation.
There is a right solution out there for everyone. The key is to understand that it isn’t the same solution for everyone. It’s different for each client, and if you’re being told that it isn’t, what they’re really saying is that you are welcome to any colour you want, so long as it’s black.
This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.