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Been ages since I posted on Adviser Lounge. Still a great site. About to get slightly worse.
So I’ve been bopping around the place over the last month or so banging on about platform pricing again. I’m conscious that few find this as interesting as I do, so this short post isn’t about basis points vs fixed charges, or about adviser-pays vs client-pays.
Instead, it’s about price vs. value. As usual when you compare prices, those with more fully priced Things – whatsoever those Things might be – will bang on about delivering added value, greater value, increased value, enhanced value or other phrases ending in ‘value’.
One provider wallah, who is not unrepresentative, lamented in the meejah, “When, oh when, will we MOVE THIS ACCURSED DEBATE FROM PRICE TO VALUE.” I may have paraphrased slightly. I’ve also gone up against a couple of folk who should have known better on Twitter to debate value, and this is what one of them said:
“Price is what you pay. Value is what you get.”
That’s a good line, and fits in 140 characters, so kudos and all that. Unfortunately it’s just not true.
Price is what you pay. Goods and services is what you get. Value is what you derive from those goods and services. That’s basic economics and if you allow it to it will save you.
Here’s the thing. Those who have an interest in charging above market rate need to find a justification. They do that in saying that they ‘add value’. That might be better service, more flexibility, a squirrel-shaped moneybox (which swayed my pocket-money saving decision to Bank of Scotland at the age of 7), or whatever. But none of those things are value. Value is what an individual attributes to a good or service for which they have paid money.
We can express this as an equation. (You can express anything as an equation if you try hard enough.)
Too often the equation is: value = what you do x what you charge
The real equation is value = (what you do x what you charge) / what the purchaser thinks of it
In platforms the purchaser is the client, not the adviser, by the way.
The point of all this is that platforms cannot add value. Advisers can’t add value. The lang cat can’t add value to our clients. All any of us can do is do our thing, charge what we charge and make it clear to clients why we are proud to charge our price and why we believe we’re worth the money. We have to leave it there. We cannot ascribe value. That’s down to the client. Value is personal and experiential. It is the result of what we do, not a constituent part of it.
Once we get past saying ‘we’re focused on value not price’ and start saying ‘this is what we charge and why we think we’re worth it’ then we’re on a better road.
All this pricing chat is as a result of us having our new guide up for sale. There’s a discount for Adviser Lounge users, find the website and use code CHEAPCAT in the sneaky discount box.
It’s excellent value…DAMMIT.