Value Price is what people pay, value is what they pay for. You don t get paid for the hour, you get PAID FOR THE VALUE you bring to the hour. WARREN BUFFET
Today s objectives 1 Define the real issues with fees Begin the process of creating 2 your personal value policy Create a plan to take control of your 3 personal brand
1987 ABC Brokerage Firm John Doe Stockbroker
1987
Federal funds rate, 1994 1995 6% 6.00% 5% 4% 3.25% 3% Feb 4 1994 Mar 22 Apr 18 May 17 Aug 16 Nov 15 Feb 1 1995
What is your value? February 1999 February 2003
2014 June 2014 July 2014
Today s objectives 1 Define the real issues with fees Begin the process of creating 2 your personal value policy Create a plan to take control of your 3 personal brand
Fees are always in the news
Money back? Really? What s our value? What if you re not happy? Do they have to pay you back? Nope. Why not? 2014 / 2015 TV ads
Sound familiar? Current market conditions require more, not less, work on my part. FINANCIAL ADVISOR, 27 YEARS My clients are more concerned and require more hand-holding than ever before. PRODUCING SALES MANAGER, 19 YEARS I spend the same or more time per account than I did two years ago. FINANCIAL ADVISOR, 11 YEARS I deliver value in hundreds of ways for my clients, not the least of which is keeping them well positioned and focused on long-term goals. FINANCIAL ADVISOR, 21 YEARS Source: John Hancock Research, March 2010.
So why the fire sale? 7 out of 10 advisors surveyed have cut fees 11% said their clients objected to the fees they paid 32% said their clients referenced better offers from the competition 32% 11% 53% 53% said their clients had questions about the value they received for their fees Source: John Hancock Research, January 2013.
Timing and Language 63% of advisors surveyed discuss fees at the beginning of the relationship 19% when defining goals and objectives 19% 6% 6% when conducting portfolio review Other 44% 44% when outlining joint expectations Source: John Hancock Research, January 2013.
Why do your clients pay you a fee? Strategy of a top producing advisor 1 The value of our services is worth at least 3% of your assets under care with us annually.
The value of advice DALBAR Annual Study of investor returns Average annual returns, 1994 2014 Advisor Alpha +4.66% 5.19% 9.85% Equity Investor S&P 500 DALBAR s 20th Annual Qualitative Analysis of Investor Behavior, DALBAR, Inc., 2015. Investor returns are calculated using data supplied by the Investment Company Institute that represents the change in total mutual fund assets after excluding sales, redemptions, and exchanges. This method of calculation captures realized and unrealized capital gains, dividends, interest, trading costs, sales charges, fees, expenses, and any other costs. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States.. It is not possible to invest directly into an index. Past performance is not indicative of future results. Sources: DALBAR s 21 st Annual Quantitative Analysis of Investor Behavior, John Hancock Investments, 2015.
Why do your clients pay you a fee? Strategy of a top producing advisor 1 The value of our services is worth at least 3% of your assets under care with us annually.
Your value proposition Comprehensive financial plan Investment process Risk tolerance and asset allocation 1 1 1 % % % 3 %
Why do your clients pay you a fee? Strategy of a top producer 1 The value of our services is worth at least 3% of your assets under care with us annually. 2 Do you have any questions on our value? 3 Our goal is to far exceed in value what you will ever pay us in a fee.
Putting a Value on YOUR Value Never Negotiate Your Value How do you respond when a prospective client says "I ve met with two of your competitors and both have offered to lower their fees to get my business. Duncan McPherson CEO, Pareto Systems
Your value proposition Comprehensive Total plan Investment process Risk tolerance and asset allocation 1 1 1 % % % 3 %
Today s objectives 1 Define the real issues with fees Begin the process of creating 2 your personal value policy Create a plan to take control of your 3 personal brand
Things advisors and clients agree on Most clients and advisors agree that clients are seeking: Personal attention and service Proactive management of their account Answers to their financial questions Clients and advisors also agree that: Clients want the advisor to provide an assessment of their entire financial situation Clients risk tolerances and goals should be clear Clients want to access the advisor s knowledge, research, and ideas Advisors should provide an asset allocation strategy
You do so much more for your clients Develop financial goals Create a timeline Understand risk tolerance and expected rate of return Use data to analyze existing investments, and make recommendations about what to do going forward Determine asset mix Create a plan for retirement Understand and communicate risks Estimate expected rate of return Help decide which investments to own in nonretirement accounts Look for ways to reduce taxable income Understand taxes incurred when they buy or sell investments Identify how much they need to save Provide access to many types of retirement accounts to use (IRA, Roth, 401(k), etc.) Understand insurance what type and how much (including life, long-term care, disability, and even property, casualty, and health insurance) Manage an emergency fund Explore what changes might improve their tax situation Discuss leasing an automobile versus buying Mortgage refinancing Cash management Commercial financing/lending Vacation property evaluation
What do your clients and prospects value most? Strong Correlation to client loyalty Knows a great deal Has experience Straightforward about fees Can explain how products and services can help Looks out for my best interests Understands the needs of those in my situation Will disagree with me Motivates me to take action Easy to get along with Weak Technical Is responsive Type of advisor skill required Emotional Source: The VIP Forum s Survey of High-Net-Worth Baby Boomers, The VIP Forum of the Financial Services Practice, 2010.
The Value Book
Today s objectives 1 Define the real issues with fees Begin the process of creating 2 your personal value policy Create a plan to take control of your 3 personal brand
But first, it starts with you STEP ONE Ask yourself: What is your brand?
Who s this? Richard Simmons
Who s this?
Your visibility is more important than your ability!
It starts with you STEP ONE Ask yourself: Why do your clients pay you a fee? Is it a good answer? Is it the best answer? Is it the same answer others on your team would give?
It starts with you STEP TWO What does your brand mean to your clients?
Next, expand to other centers of influence STEP TWO Ask them: What do you perceive to be the greatest value I bring to our working relationship? What do you believe is my greatest strength? Why do you choose to work with me, even in challenging times? Ask your clients, friends, family, colleagues, or favorite wholesalers. Consider an advisory council.
Putting it all together STEP THREE Frame your value My best clients tell me that the greatest value I deliver to them is. This is what makes YOU the Essential Advisor
Take action! Discuss fees at the start of every client meeting Create a clear and consistent personal value policy Define and project your brand and let us help you
John Hancock Investments A trusted brand John Hancock has helped individuals and institutions build and protect wealth since 1862. Today, we are one of America s strongest and most-recognized brands. A better way to invest We search the world to find proven portfolio management teams with specialized expertise for every fund we offer, then apply vigorous investment oversight to ensure they continue to meet our uncompromising standards. Results for investors Our approach to investing has led to a diverse set of investments deeply rooted in investor needs, along with strong risk-adjusted returns across asset classes.
More information For more information, contact your John Hancock Business Consultant at 800-225-6020 or visit jhinvestments.com A word about risk Clients should carefully consider a fund s investment objectives, risks, charges, and expenses before investing. The prospectus contains this and other important information about the fund. To obtain a prospectus, call John Hancock Investments at 800-225-6020 or visit our website at jhinvestments.com. Clients should read the prospectus carefully before investing or sending money. John Hancock Funds, LLC Member FINRA, SIPC 601 Congress Street Boston, MA 02210-2805 800-225-6020 jhinvestments.com NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE. NOT INSURED BY ANY GOVERNMENT AGENCY. MF147119 FEEPPT 9/13