In my last column, I reviewed the commoditization trap, explaining how microchip technology is fundamentally transforming business, including legal, tax and financial professional practices. I asked how attorneys should respond to a world where clients have the ability to prepare estate-planning documents on Legalzoom at a fraction of the price that we charge.
While no one would disagree that the services of a qualified estate-planning attorney are far superior to those you can find with Internet document preparation software, it’s important to understand what part of your practice is “commoditized,” as opposed to where you provide true client value.
Know this: Despite your best efforts, your documents are a commodity.
I agree that they are very important, and that your documents may be far superior to Legalzoom or to those used by the practitioner down the street. To your potential clients, however, your documents are all exactly the same. Don’t you just hit a button to produce their trust, will, durable power of attorney, health care surrogate and living will?
Combating Client Misperceptions
To combat this perception, you need to distinguish between the four different levels of material found on the Internet and understand from where client value originates. This will serve to build a foundation to understand why, in the client’s eye, your services are far superior, leading to how you may package those services to break through client misperceptions. Here are the four levels of material:
- Data. The Internet is full of data. Data is everywhere, but it’s fleeting, relevant only in the moment. Stores record the amount of sales revenue daily. The rise and fall of stock prices, the number of individuals affected by a flu virus and how many new jobs were created in the past quarter are all examples of data.Without context, however, data means absolutely nothing.
- Information The second level is information. Information is useful but has a shelf life. Most of what we find on the Internet, on television or in periodicals can be classified as information. When I get sick and suffer from unusual symptoms, I may go to the Internet to figure out what I may be suffering from. The daily news contains a great deal of information, but it may only be relevant today. It’s stale tomorrow.There are two problems with information. First, we don’t know its source so we have no idea as to its veracity. Second, like data, there’s no context. Going back to my Internet search of my symptoms, even if WebMd provides a probable diagnosis of my illness, without proper training and experience, I may be entirely off the mark.
- Knowledge. Knowledge has a much longer shelf life than information and is usually supported with years of education and experience. Knowledge isn’t something gained by reading articles in newspapers, magazines and Internet blogs. You may digest information from those sources, but you won’t earn any knowledge without being able to place that information into both a historical context with a view of relevant but interrelated factors.While knowledge is valuable, it too changes over the years. Physicians’ knowledge of the methods and medicines used to treat leukemia, for example, is vastly different today than it was even five years ago. Like data and information, knowledge also has a shelf life, albeit a longer one.
- Wisdom. In contrast, wisdom, the highest form of information doesn’t have an expiration date. Most of the world’s major religions are predicated on the wisdom of how to live a full and good life as a human being with all of our faults and foibles. Wisdom can also be found in many of the best medical, legal and financial professionals.Some professionals have knowledge gained from years of experience but lack the wisdom to choose whether one course of action is better than another – which is the wisdom of how to best apply that knowledge. None of us know what the future brings, even the most knowledgeable professionals. Life has a way of surprising us.
True wisdom comes from a unique ability to filter knowledge and experience into a fabric of understanding, while communicating that understanding in a way that endures. It’s not always sexy or flashy, but clients know wisdom when they hear it.
Just yesterday, in fact, I visited with prospective clients, a married couple who sat down with me to discuss what turned out to be a rather complicated estate plan. They had several different types of assets and a blended family. When it came time to quote my fee, the husband paused and said, “That is about double what I expected.”
Hearing that, I reviewed their goals and concerns again, highlighting the steps that we would take to solve their problems. It’s important to note that I didn’t give my clients the answers to all of their problems, only the steps that we would take to consider their issues and arrive at a plan to achieve their intended results. In fact, I wasn’t sure what those answers may be, since the solution would result from our collaborative efforts that would take place over the course of the next several meetings.
You can’t find that on the Internet. After that five-minute review, the clients happily signed my engagement letter. They really didn’t care about which documents we were going to use to achieve their goals. I didn’t mention irrevocable trusts, generation skipping tax exemptions, income with respect to a decedent or family limited partnerships. Those words never came up in our discussion.
Instead, we talked about their worries and their concerns. I described a road that we would journey together to achieve their goals.
What they wanted was my wisdom.
There’s a consistent method I use to identify which prospective clients will appreciate and therefore gladly pay for my wisdom and which ones won’t before I spend any time meeting with them. I’ll reveal that secret in my next column.
Published January 22, 2016 on wealthmanagement.com