People know they need to make better financial decisions.
But there’s a big difference between knowing something should be done and actually doing it.
For example. Have you kept fit during lockdown?
When the gyms closed last year, I made a pretty good start to my home fitness routine. I went running a couple of times a week and picked up a few weights around the house.
It was good while it lasted. I felt pretty pleased with myself. But it didn’t last too long.
Fast forward to the start of this year.
My gym equipment has accumulated a layer of dust, my running shoes are stuffed into the back of my wardrobe and the Deliveroo rider and I are on first name terms.
Now that gyms have reopened, I’m getting a flurry of emails designed to convince me to come back to my old gym or cheat on it with a new one.
These messages follow a similar pattern:
- Health is important. You can feel better.
- The gym is good. You can look better.
- We can help you look and feel better.
The thing is, I already know how important my health is and I’m already sold on the concept of feeling good about myself.
Yet I still haven’t renewed my gym membership.
Why?
Because, like most humans, I don’t make decisions based on value alone. I also consider the costs (and not just the financial ones).
So, what are the costs stopping me from accessing all of those great gym benefits?
Inertia
I’ll have to free up time in my daily routine to embrace the gym-going lifestyle.Anxiety
My self-esteem is going to be pretty low when I stand in front of that mirror in the gym alongside a load of strangers I haven’t had to mingle with for a year.
Ambiguity
I’m not entirely sure what to do when I get to the gym. I probably need to do some research on the best way to ‘shed the lockdown muffin top’.
Ultimately, focussing on the benefits of going to the gym isn’t going to change my health decisions or – more importantly – my behaviour.
I already know I should be doing things differently, but there are behavioural and emotional constraints holding me back.
And it’s exactly the same for financial advice.
I’d estimate that 95% of financial adviser communications to prospective clients are value-focused. They promote the benefits of advice by educating prospects on the tax savings they could make; the investment returns they could receive and the clarity they’d feel.
Now, I’m not saying that the benefits aren’t important; they are. But the world is filled with prospective clients who already know they need to do something. They know they’re not making the best use of their wealth and they know they probably need advice.
But they’re held back by the perceived emotional and behavioural costs involved. They worry about losing control. They feel anxious about how an adviser might judge their poor financial decisions. They’re uncertain about exactly what the advice process involves.
To change these behaviours and make your value clear, we need to broaden our message. We need to help prospective clients minimise their perceived costs of engaging with you, as well as promoting the benefits.