Billing clients for advice is a hot topic across the insurance industry; but one firm that’s been doing it for decades is PH Wealth.
Jared Campbell, a senior adviser at the firm (which doesn’t advise on life insurance) was part of a panel discussion at a Financial Advice NZ Bounce conference last month and said the company focuses on providing advice rather than products.
“The business is mirrored on what accountants do – and that’s charge for advice,” he told a live Dunedin and online audience on 24 September. “We charge for financial plans, and we run a good profitable business by doing so.
“When it comes to getting the culture right, all our staff are on salaries, no one is incentivised by commission.
“That salary option is really nice, because when I walked in the door on day one I didn’t feel as though I needed to start selling. I could take my time and learn the ropes and get into that advice space – it was great for my career.
“I do feel for those who have to walk in and start selling to eat next week.”
The firm encourages good staff performance by using what Campbell calls ‘leading indicators’.
“That means we measure activity, what the advisers are doing, and that might lead to getting a new client, verses how many prospects they met with last month,” he said.
I do feel for those who have to walk in and start selling to eat next week…
For example, the firm’s staff are encouraged to develop contacts who will recommend their services to clients.
“I might not have met with any prospects last month, but I might have had four coffee dates with lawyers around town, or gone to some social event that might lead toward getting those referrals,” said Campbell.
Fellow panelist Dean Logan of Christchurch-based Logan Smythe & Associates has worked in the insurance industry since the 90s. He said both commission-based sales or billing for advice can work well.
“Both structures can suit different business,” he said. “As long as the mindset is right with giving advice, and the culture is right within the business, then I think any structure works.
“To me, whether it be salary or whether it be commission, it shouldn’t change, or cause a difference, within the advice space.”
Logan said the key is to connect with clients, understand what risks they have and then help them understand the risks.
“It’s a journey of discovery,” he said. “So we know what their requirements are before we give them any solution.”