Blogroll

When we form our opinions, make buying decisions, or adopt an attitude, we do so based upon our perception of reality, not on reality itself.

The existence of the advertising industry is testament to this fact.  Whether it be fizzy drinks cans branded to look like healthy fruit juices, or financial products with the word ‘flexible’ in the title when they are anything but, advertising attempts to shape our perception of reality.


I read an article recently, about when Ricky Gervais and Karl Pilkington first met.  Ricky told a story about how he asked Karl if he could hit him on his head with his mobile phone.  When he did so, Karl asked “how did it sound?”


Karl, however, recalls that Ricky just hit him on the head with his mobile phone, without asking, and when Karl asked “what did you do that for?” Ricky said “Because I wanted to hear what it sounded like”.


The same memory, but with different perceptions.  


I used to work for a pension provider.  We had a sales meeting once, during which a colleague demonstrated that our company's personal pension products were better than a particular competitor, based on charges, performance, service, financial strength, in fact every important category.  And yet the competitor outsold us 3 to 1.  The only possible reason, my colleague concluded, was perception, as they were a far bigger company.


For many years, financial planning and financial products were sold on the basis of commission.  Many people believed the adviser's classic line “I get paid by the insurance company”, not thinking that the commissions being paid to the adviser were coming out of charges from their money.


Currently, many IFA firms will claim to be ‘fee based’.  They say this because it creates the right perception (and because they need to make this statement to claim to be independent).


Look beneath the surface, and in many cases, the fixed fee quoted is remarkably similar to the commission that the firm would have otherwise have received.  It creates the perception of a quality fee based firm, whereas the reality may be that they still operate in the old school way of selling products.


A modern, professional IFA firm will focus on planning, objective setting, and will establish relationships with clients involving regular reviews.  This is what a potential customer should see to analyse, and not be drawn in by the perception the firm wishes to portray.