Within the field of financial services, the term “advice gap” refers to a number of different things, one of which is the specified sum of money a client requires to meet minimum advice charges. The gap begins there if the client funds are insufficient.

One of the fundamentals of the Price and Value outcome is to identify the “cost of manufacture,” which logically becomes the minimum charge can further explain the concept. In this context, the advisory firm is the manufacturer, producing and providing their service to clients, first as an initial service and then annually as an ongoing service.

How do you determine your minimum charge? Simply return to a tried-and-trusted business tool, the time-and-motion exercise, or virtual time-and-motion in this instance. There are a few important steps:

• Set an hourly rate for each involved function, usually adviser, paraplanner, and administrator
• Calculate the amount of time required for each function with the advice process you are measuring
• Calculate the financial amount, which is the hourly rate multiplied by time
• Work “in the round” using typical scenarios and averages. We are dealing with real life so it is impossible to accommodate all situations because they vary so greatly.
• After setting your typical or standard minimums, add an element of simple, complex, or standard scenarios to therefore have minimums for each.

Now that you have a red line, potential customers who don’t meet your minimums can be redirected or simply not engaged with because doing so would be “not value.” Existing customers could follow the same procedure.

What steps could be taken to close this gap? Companies can look into a number of different areas. One, some, or all of them will help close this gap.

• Simplify Procedures: Review and improve your advice procedure on a regular basis to cut down on unnecessary steps and increase productivity.
• Make use of technology: Automated tools, CRM systems, and financial planning software can be used to reduce manual labour and improve accuracy.
• Segmentation of Clients: Offer more cost-effective solutions to clients with limited resources by tailoring services to various client segments based on their requirements and financial capacity.
• Education and Training: Make an investment in ongoing training for your team to boost their efficiency and skills.
• Collaborations and Partnerships: Create strategic alliances with other businesses or professionals to pool resources and expertise and possibly cut costs.

Firms can better serve a wider range of customers and close the advice gap by implementing these strategies.