Developing a post-QAR Advice Value Proposition


What are the practical steps to articulating value that clients derive and are prepared to pay for?

Defining the value of advice has never been more important

The term ‘value proposition’ is one financial advisers hear and read about frequently, and for many years now, the profession has been urged to do a better job of articulating the value of advice to consumers, in order to increase its uptake.

The mass exodus of advisers from the profession in recent years has created a massive supply side constraint – there simply aren’t enough advisers to meet even modest levels of demand – to the extent that many advisers are rushed off their feet without even trying.

But this is a false dawn, as advisers stare down three emerging disruptive forces:

  • the slow but sure rise of robo advice and artificial intelligence
  • the looming intergenerational wealth transfer, and
  • the potential entry of large and new players into the advice space, as a result of the Quality of Advice Review (QAR).

In this context, it is imperative that advisers revisit their value propositions, to ensure they are aligned with their capabilities and target markets, and to ultimately ensure they can make their practice as ‘future proof’ as possible.

In this article, we will explore the concept of the value proposition as it pertains to financial advice. We will examine the client perspective on the aspects of advice they value most, and look at how advisers believe they need to deliver value. We will also provide practical tips on how advisers can construct and articulate their value proposition in a way that can help strengthen client relationships, make it easier to justify their fees, and make their practice more sustainable in an uncertain future.

What is a value proposition?

In simple terms, your value proposition is a statement of the value you provide, to whom, and how you do it uniquely and well. Put another way, why should clients choose you, and why should they pay your fees?

A strong value proposition should be:

  • compelling and relevant to your target customers
  • differentiated from your competitors, and
  • supported by proof points.

Tied up in the concept of a value proposition is the idea that you can’t be all things to all people and expect to succeed – you need to have a clear idea about what customer segment you are serving and then align your entire offering to their needs.

An easy way to understand this concept is to consider brands like Aldi, Jetstar, and IKEA. They are all brands for whom low prices are central to their offer. But they also have a clear idea about what their customers value, and what they are prepared to trade off.

With IKEA, there are only a few store locations, and you need to build your own furniture.

There are generally long queues at the checkouts.

At Aldi you are buying ‘house brands’, there is less choice, and you have to pack your own bags and pay for a trolley (and return it to get your money back).

With Jetstar you have to pay extra for catering, checked baggage, or to choose a seat.

All these elements allow the price to consumers to be shaved to the bone.

What is the value of financial advice?

One of the challenges advisers face in creating a meaningful value proposition is understanding the value clients actually derive from financial advice.

As tempting as it is to think in terms of the functional elements and outcomes of advice – such as investment returns, tax savings, a financial plan, or a diversified portfolio – these are generally not where clients themselves derive the most value. They are also not particularly differentiating or compelling.

Linking your value strongly to investment performance will also be problematic, especially during times of volatility and uncertainty (such as now!).

So then, what is the client perspective on the value of advice?

There is an extensive body of research[1] suggesting clients place more value on the emotional – rather than functional – benefits of advice. The process of articulating goals, creating a plan to achieve them, and monitoring progress against those goals has been shown to have a significant and positive psychological impact, beyond mere investment returns.

A number of recent Australian studies shed light on the aspects and outcomes of advice that are most valued by clients.

A 2019 study[2] by CoreData asked a random selection of advised clients which factors they used to assess the quality of their relationship with their adviser. The ranked responses are shown in Table 1 below.

More recently, the FPA’s inaugural Value of Advice Index[3], launched in October 2022, identified the top 10 key benefits clients realised from their advice relationship, as shown in Table 2.

The research referenced above makes crystal clear the importance of the relationship aspects of advice, and advisers investing in the relationship management element of their proposition will undoubtedly reap rewards in terms of both client acquisition and retention.

Importantly, relationship management is very hard to replicate, by either competitors or robots, meaning advisers who focus on the hard-to-automate human side of their proposition are more able to inoculate their practices from future competitive threats.

Robo v human

A US study of advice clients, released in 2022, found an overwhelming affinity for the human touch[4]. More than 90% of investors who worked with a human adviser said they wouldn’t consider switching to a robo-adviser, while at the same time, 88% of robo-adviser users said they would consider switching to a human adviser in the future.

To the extent that the take up of robo-advice in Australia lags the US significantly, it seems reasonable to assume that local investors would exhibit a similar preference.

Intergenerational wealth transfer – opportunity, or risk?

The much-discussed intergenerational wealth transfer is underway around the world. According to research by Griffith University[5], the amount of wealth that is ripe for transfer in Australia over the coming years is around $3.5 trillion. Around half a trillion sits with people aged 80 and over, with transfer therefore imminent.

While this should represent an enormous opportunity for advisers, it is actually shaping as an existential threat, partly because of the complex dynamics of parent-child relationships, and partly because of the different financial behaviours and attitudes that characterise younger clients.

US research[6] suggests around two-thirds of ‘inheritors’ will discard their parent’s advisers, either appointing their own or exiting the advice system altogether. Concern over the potential loss of this wealth is echoed in the recent finding that 59% of UK financial advisers fear the health of their entire business is at stake[7].

This challenge will not be addressed via a proposition focused on investment performance; it requires more focus on building relationships with younger generations within client families.

Advisers are looking to add value beyond asset allocation

Unsurprisingly, investing time and effort into building client relationships, rather than the functional, aspects of their proposition has been made the top priority by many advisers.

A 2020 global survey[8] that asked financial advisers to identify the top 5 skills they needed to improve on found that relationship-building, communication, and client decision-making were all top priorities.

Advisers are rethinking their core proposition

There is clear evidence advisers are recognising what is truly valued by their clients, with US research confirming a continued decline in the share of advisers who view investment management as their primary business proposition. The 2021 survey9 by FlexShares found that only 33% of advisers identified investment management and research was their primary business proposition. This compares with 45% of advisers in 2016 and 56% in 2014 who identified investments as their central value proposition.

The biggest influence on investment performance is behavioural

Even allowing for the importance of investment performance as an enabler of clients achieving their life goals, the ways advisers add value to that performance are not necessarily what many would think.

Extensive research[10] has suggested that behavioural coaching and financial education – helping clients avoid short term, panicked, poorly informed, and even irrational investment decisions – can add 1-2% net return to a client, around twice that attributed to asset allocation and six times that from portfolio rebalancing.

Building your proposition by identifying the source of value

The creation of your value proposition is the culmination of a process where you consider what is important to your clients, and what is important to you.

Rather than assuming what is important to your clients, the best way is to ask them, via some sort of online or face to face research. This research doesn’t need to be complex; you can start by asking a few simple questions of new and existing clients:

  1. How would you describe your long-term financial goals?
  2. Why did you engage a financial adviser?
  3. What criteria did you use when searching for an adviser?
  4. Why did you choose me?
  5. Would you recommend me to a friend or colleague? Why? Why not?
  6. At a BBQ, how would you describe what you value about our relationship?
  7. Have I met your expectations?

Revisiting your target market and offering

A key component of your value proposition is who you are uniquely positioned to create value for – your target market.

Futureproofing your practice may well mean going down a more specialised path, allowing you to be much more focused in who you can help. This can help your marketing and messaging be more targeted, and can also help you focus and align your service offering and client experience to the needs of that audience. For example, products and services and access channels you would offer a retiree would differ to those you offered a small business owner, or a high-net-worth client, or a millennial.

A quick test of how well aligned your proposition is to your target market is to ask yourself the following questions:

  • Do you have existing clients in this segment?
  • Do you understand their unique needs?
  • Do you understand the language they speak?
  • Are you comfortable engaging with them?
  • Do your premises and branding reflect that target audience?
  • Do you have the right technical knowledge to offer the types of advice they need?
  • Does your business have the right resources to operate in this market?
  • Do you have the right referral sources?
  • Do you have clients who fall outside your target audience, and if so, how viable is it to keep serving them?

Finally, write it all down

Formalising your value proposition has many benefits.

It gives you clarity and focus, helping you build your practice and client experience around that proposition, and making it clear what type of clients to turn away.

It can be shared with staff, and given to referral partners so they understand the type of clients to refer, and just as importantly, those not to refer.

It can guide your market facing language, in terms of your branding, your content, and your website.

Formalising your value proposition may be done at two levels – a summary level, and an expanded, client-centric level.

To construct the first level, you need to consider:

  • Who you help (target audience).
  • How you help them (service offering).
  • The positive outcomes and value they derive from your advice.

As an example, this may result in a statement looking like:

We help over- 50 middle-income earners co-create a retirement plan that will deliver confidence and clarity in their retirement incomes, so they can live a retirement that is comfortable, fulfilling, and stress free”.

While this high-level statement can prove useful for staff and referral partners, and to guide strategy, crafting your market facing messaging to be more customer-centric may require you to expand on this.

An example can be found in the work of US adviser, Mitch Anthony[11], who articulates the six key value propositions of financial planning from a ‘Return on Life’ rather than a ‘Return on Investment’ perspective:

  • Organisation: We will help bring order to your financial life, by assisting you in getting your financial house in order (at both the ‘macro’ level of investments, insurance, estate, taxes etc, and also the ‘micro’ level of household cash flow).
  • Accountability: We will help you follow through on financial commitments, by working with you to prioritise your goals, show you the steps you need to take, and regularly review your progress towards achieving them.
  • Objectivity: We bring insight from the outside to help you avoid emotionally-driven decisions in important money matters, by being available to consult with you at key moments of decision-making, doing the research necessary to ensure you have all the information, and managing and disclosing any of our own potential conflicts of interest.
  • Proactivity: We work with you to anticipate your life transitions and to be financially prepared for them, by regularly assessing any potential life transitions that might be coming, and creating the action plan necessary to address and manage them ahead of time.
  • Education: We will explore what specific knowledge will be needed to succeed in your situation, by first thoroughly understanding your situation, then providing the necessary resources to facilitate your decisions, and explaining the options and risks associated with each choice.
  • Partnership: We attempt to help you achieve the best life possible but will work in concert with you, not just for you, to make this possible, by taking the time to clearly understand your background, philosophy, needs and objectives, work collaboratively with you and on your behalf (with your permission), and offer transparency around our own costs and compensation.


At a time when the advice profession faces several looming disruptive threats, it has never been more important for advisers to define and articulate their own value proposition.

To resonate with clients, a proposition must take the perspective of the value they see in advice, rather than be assumed. A common mistake is to express the value of advice in functional outcomes, such as investment performance or tax saved, or the production of a financial plan, whereas the areas clients value – and are prepared to pay for – are more likely to be emotional.

A growing number of advisers recognise this, and are seeking to prove they can add value beyond asset allocation, investing more time and resources in the client relationship aspects of their skills and offering.

The advisers who do this well will be rewarded with improved strategic clarity, client loyalty, and practice sustainability.





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