Hello and thank you for tuning in to another episode of a professional pricing Society podcast. My name is Terrence may have another great conversation store for you today. With a very, very special guest who goes by the name of Michael Compton. Michael is the director of firm strategy and leader of the new pricing function at Edward Jones with 16 years and full service, Financial advisory industry. Experience, mr. Michael sir, how are you doing today? Give a great. Thank you, Terrance.
It's good to be here. Good, thank you so much for being here. We're so glad to have you. Let's go ahead and jump into this conversation. So you're speaking with us today about pricing with evolving value within a professional service industry. Okay? So this is a very interesting topic. What why is pricing with evolving value within the Professional Services industry important for pricing professionals today?
Well, I was able to attend last Spring's conference and being in the Professional Services industry.
I saw how sharing approaches and sharing, you know what's happening in a different Industries was really informative for me. So I thought when given this opportunity I'd like to kind of talk about some of the challenges that we see because I don't think I think it will not only help folks in the Professional Services industry, but might be able to, there's approaches in the discussion could even apply to maybe some other Industries as well.
Well, as you as you think about the full serve it wealth management, full service industry. It's evolved so much over time. So go back to like 1980. Like if you wanted to buy a stock or Bond or mutual fund, you had actually call an individual and then you know, all of a sudden, the end of the 90s come and we've got the internet, you know, you could place a phone call. So now we got day Traders, right?
So what do you mean a broker for Well, they're going to start build it. Going to say, wait a minute, my value prop is now building portfolios. So, you know, that that went for a while, but then you've got Robos, enter the industry and you've got these Hybrid models, where you have someone in the home office kind of coaching you through your investment. So why do you need to pay this full service professional these higher fees. So just the the value is changing over time.
And now I really it's delivering Personalized comprehensive advice and guidance but our monetization or the way we price that hasn't caught up to where the value prop is it just that Evolution and how quickly it's changing over time. I thought would be a really great conversation. Sure, absolutely, absolutely. So, yeah. So I want to ask is well, you know, just thinking about that a little bit further and about the evolution of this.
What do investors value in a full-service wealth management offering? Whirring compared to, you know, do it yourself situations or other scalable models? Absolutely. So when you when you go to a full-service wealth management office, you're getting actually a lot of services. You know there's what we call custody in the industry where they custody your assets. So if you own stocks bonds mutual funds, you know, they
custody this for you. They also in do investment management where help you enter the market, a line. Goals to your Investments but it's a lot more of that than that is. Well if you take a JD Power results on investor satisfaction for 2022, just hit and the way they are starting to talk about the value proposition. In this industry, it it's holistic. Financial advice where there's a plan and that you have a professional delivering that to you.
And one of the key things that we've seen in past. This is if you have a professional delivering that advice and guidance, it's almost like a coaching relationship and they're holding you accountable so that you personally can meet your goals mom. And one other thing that I took from that survey that was interesting is the number the third driver that they cite. As the third most of corn driver is the value for the fees that they're paying.
That's what clients are investors are looking at. And then I think I hit on it just a little bit. Trust is such an important. Day, you're talking about your money, your livelihood, how you're going to retire? How are you going to put your kids through college? Do you need to take care of your parents because they're getting out a you know, they're getting their up in the years. Like these are really, really important things that people need to accomplish and having a trusted advisor.
That's, that's part of that value proposition where they can kind of almost do life with you. So, very different from other Professional Services Industries, but it's part of the The overall value proposition and you see, clients will put more emphasis on certain parts of that value proposition. Where some clients are just looking for the Investments. Some clients are looking for that personal relationship.
Some clients are really looking for that plan to give them confidence that they can actually get there. So it's really interesting, that is interesting, so it sounds like this is heavily based on cultivating, a mutually beneficial relationship a healthy relationship. Exactly. And then now, think about how do you how do you pay for Investment Services? Yeah, you you pay for a stock trade, you might pay two and a half percent for stock trade that you probably could do
online for free or $15. So it's you're in the situation where you're almost like overpaying and then getting the good stuff for free. Hmm. That makes sense. It does make sense that's interesting. Okay cool. Yeah so there's the These Dynamics between us in our home office that you'll run the business and our sales folks are financial advisors. So Dave, they also need to keep
up with the evolving industry. So they have some clients that put a lot of value on that, you know, stock recommendations kind of like the way we used to do business in the 80s and then you've got other clients that are just starting to save for, you know, retirement. And it's more about our Saving versus how they're saving. So, just keeping our sales force in tune with the industry and where value is evolving over time with their different segments of clients.
That's a really interesting Dynamic if you start to dig into it and then also the amount of information investors have I'm always and I'll probably do this pull in person, you know. Do you know what you pay for financial advice? And I'll tell you it is all over the place on that. What that answer is. So it's very interesting.
The amount of trust their pudding with their financial advisor, but the very limited understanding and how they pay and then you as a professional prices, you know pricer in the industry. How do you how do you you know how do you reconcile these things? A lot of trust is needed. Not too many of your clients or customers understand how they're paying for advice. You know how do you how do you manage pricing in this type of Industry? That's into that.
It's a good point, you know, not everyone may be aware of how their, maybe what they're getting for their book that makes sense. Okay, exactly.
Now, you may have touched on this previously, just now but what makes Professional Services pricing different from other Industries. So you can think about think about professionals like financial advisors or doctors or lawyers, They typically run their business and I'm using air quotes, I know you can't see it. But yeah, they have their their Niche, they have their approach but we're providing guidance on how they need to price their practices.
So it's interesting on, you know, how you have to almost be a little bit of customized and how you approach pricing or you need to segment your Professionals in the business to be able to do that. So that's One interesting Dynamic versus another, you know, like manufacturing might have sales associates. That's an important Dynamic, but it's not as I don't think it's differentiated.
As you'll see one financial advisor, or one doctor in their practice versus another doctor in their practice. And then the other thing that I think makes it really different is the amount of Acumen that professional has. So you have that professional enters the you know enters the industry. They might have one to three years of experience. It's versus the professional that has 20 years of experience and there's a lot of value or there's a lot of perceived value in that professional.
That has a lot of experience. So how do you quick for that? When you're thinking about it? And then finally, when you're in a Professional Services industry, the client or the customer is kind of bringing some of the goods, to the cam, you know, to the relationship. So in Investments, it's their their Investments and their say, Names. You know, and then another Professional Services like a plumber. You know, they're working on
your stuff. So it's interesting where you have that different Dynamic that you would in other industries. That is interesting. Very, it's very unique. It sounds like in comparison to other Industries have there been any specific approaches you've taken towards pricing Professional Services. So so one of the one of the other reasons that I was excited to do this is I just wanted to
share some of my experiences. Has with other professionals, because our pricing team within firm strategy is only two years old. So we, you know, over time as the industry has evolved firms, like mine have owned more and more of their pricing. So, before used to be dictated by regulations and government and more boring or product partners that create like mutual funds or Insurance products. Now, we're owning more and more of our pricing.
So I made the case to my senior leaders that we really need a pricing function now and it's not something you see a lot in the financial services industry, some of the larger players have it but a lot of them don't. So I just want to share my experience on, you know, how did we build that?
So just to give you a little bit of preview of, you know what, we're going to talk about how important is it to stay close to white papers in the industry and what's in the news because there's a lot of innovation going. Going on mom. So we, we have a lot of relationships outside of our organization where we're talking to individuals that, you know, right. These white papers or are in other parts of the industry like Morningstar data is super important.
So the data that you know I'll talk a little bit about the types of data that we buy externally to really understand what's happening in the industry versus the type of data that Create in our firm to understand what clients are paying for this financial advice and kind of matching that up the value. We're going to talk a little bit about focus groups you know I was with my sales teams with potential investors with clients. How does that factor into
pricing? And then I've got a really great analytics team where, you know, we build all sorts of financial models. And as well as just capabilities that we embedded different parts of our business. And then finally communication is so important and this is actually where I'm going to share, kind of like some key.
Learnings things did not go well in a couple of instances and why I think communication across a year, you know your firm and your home office across your sales team and then being super transparent with your investors and clients is so so important because the more we Understand the better. We all stakeholders are in these conversations and leads to better pricing decisions in my opinion.
One, quick question for you. We know think about the, you know, the professional service industry, do you foresee other companies within this industry to apply or to pick up this type of mentality or approach when it comes to pricing. The pricing functionality? Absolutely, I starting to see it at least in our industry and the industries that kind of a join
our industry. I'm starting to see it in Consulting engagements where I in those are those are usually kind of like a front-runner of what you'll see kind of built out as a capability within different firms. So as we partner with different consulting firms, or just reading their white papers that they published publicly, I think this is, you know, this is a direction that a lot of our
firms are going to start. Art going towards for a couple different reasons when you think about the what some of the important Dynamics and Professional Services part of its capacity, right? So, a professional only has so many hours in a day and you know, how do you think about that and price price for that? And then on top of that innovation has just really started picking up, right? And so, what should invest, what should your clients and your?
Customers kind of be able to do on their own versus, what should the /. You know, the professional be doing just understanding, you know, cost structures costs to serve. You know, how pricing is perceive key drivers in economics. It's all really important. So I think this very broad approach that I'm getting into is really important to have something like this in place to be able to keep up with an evolving industry. Yeah, that was my assumption.
Ian but, you know, I can it's not fair to just assume it's you know after it makes the most sense to ask the ask the experts first and foremost about the future. So that makes a lot of sense. That's important to know moving forward regarding this particular industry. Now you have years of expertise in this field what makes you excited to be in a pricing role within a professional service industry? Giving all your expertise and years we have behind you. Yep.
So one of the things that makes me excited about, even though I've been in the industry for quite a while touching pricing most, most of the time I've been in the industry, what makes me really excited is that Innovation we just talked about like, it's Innovation, is unlocking value and it's not only benefiting my firm, it's benefiting our sales force. And in the end, I think clients are getting a lot.
Or value. And one of the reasons I really enjoy the role that I'm in as a pricing, professional is, how do we create a win-win situation where there's tens of millions of investors across North America and being able to achieve? Their goals is really important to them. So I feel like I'm on the front line, trying to figure out the Innovative innovative ways to price Us our services so that we create more win-win situations
from all stakeholders. So that's really what gets me excited about it and it in just the speed of change that we're seeing in our industry. Yeah that's awesome. Innovation is huge especially when it comes to industries that you know as a at-large having all necessarily picked up this concept yet. So I think there's a lot in store for the professional service industry. I think so. I've been talking a big game
here. But I think Financial Services, there's a lot of room for improvement just across the board. So that's that's something else like that makes me really excited about this role. The role that I'm in being in pricing and Professional Services is I see a lot of room for improvement and I want to be part of that. Mmm, good. Good. Well, hey that's why we have you
here now. Michael, do you have any additional resources or anything that our listeners can get, you know, learn more about you or your company or your ideas, all right, so So I don't know if we're gonna do this but happy to put my LinkedIn information out there, so feel free to contact me. Yo, I think it is in the beginning. You mentioned that I work with Edward Jones, so we're actually in, we have more locations than McDonald's. So I you have to have one of our
Edward, Jones offices near you. So, but it just look us up. Go to Edward Jones.com, you can take a look. You know, our firm but really what I'd like to encourage folks to do is if you are interested in the financial services and the Dynamics here, there is a wealth of information that is created by by firms like JD Power Morningstar, just just start googling and there's a lot of really good information out
there. But if you are interested in specifics, I would ask you to just reach out to me through Linkedin anything Michael calm Owen. Well thank you so much for your time today, sir, pricing with evolving value, in a Professional Services industry. Very insightful discussion we had with you today. Until next time, you will have a safe one. Bye-bye.