Advisors everywhere have been feeling downward pressure on fees during the last few years. With increased competition across the industry, low-cost robo advisor platforms, and greater consumer education about fees, it’s tougher than ever to have a positive conversation with prospects about the fees you charge.
But instead of lowering their fees, smart advisors are developing strategies for better communicating their value and offering more services to their clients. Before you’re tempted to cut costs so that you can lower the fees you charge, evaluate the services you offer and communicate the value you provide.
1. Explain Your Services
Most clients don’t fully understand what they get for the fee they pay you. We all want to be able to say we provide the best investments available for the lowest cost. The problem is, not only is this often not true, it’s not what clients really care about.
Research from Forbes shows that clients care more about service than investment performance when evaluating their satisfaction with an advisor. In fact, one of the top reasons a client fires their advisor is due to lack of communication—not low returns or high fees.
Your clients hire you because they trust you to provide unbiased guidance. Be sure to communicate on a regular basis the value you offer your clients including:
- Investment Management
- Comprehensive Financial Planning
- Financial Planning Software and Tools
- Financial Education
- Decision Coaching
- Support and Information
Keep your clients focused on the long-term big picture and remind them that there’s so much more to financial planning than fees and returns.
2. Expand Your Services
To compete with larger firms as times change, it’s critical to always be improving your service. By adding technology and services to your practice, you can provide more value without significant additional costs.
Consider adding a financial planning software, like eMoney, to your firm. Clients receive valuable tools to help them make financial decisions, keep their financial information in one place, and store documents securely.
Another way to expand your services is to offer more comprehensive planning options, such as long-term care insurance, disability insurance, and health insurance to your practice. By expanding the services and value you offer clients, you’re able to justify higher fees.
3. Partner With Other Professionals
Choosing a financial professional to trust with their life savings is a challenging endeavor. Once clients have done the research and decided to work with you, make it easy for them to draft the rest of their financial planning dream team. Partner with other professionals including CPAs, estate planning attorneys, and lawyers to offer a trusted team of collaborators.
By partnering with complementary professionals, you can better coordinate your clients’ financial plans and help them get all of their financial needs met in one place. Build your team of competent professionals to help each type of client you serve and have a Rolodex of trusted providers for other services like mortgages, real estate, elder care, etc.
4. Charge for What Your Clients Value
The problem with charging a fee for assets under management is that you’re forced to bill your clients for a piece of the puzzle they may not want to pay for. Top advisors are exploring ways to creatively bill for what their clients value most.
Hutchinson Family Offices charges a flat annual fee to manage a family’s wealth, instead of charging a percentage of assets under management. Their clients value the family office services they provide and are happy to pay the fees for the service.
Mike Loo in Irvine, California offers a $800 per year Decision Coaching Program to his clients to create a strategy including goal setting, quarterly progress calls, and a written financial plan. This way, he is able to profitably serve clients and answer their questions, no matter where their assets are invested.
5. Be Upfront About Your Fees
Once you’ve maximized the services you offer your clients and adjusted your pricing to reflect what clients value most, it’s critical to communicate clearly about how you get paid. Be upfront about the fees you charge and what clients can expect to receive on your website.
“Pricing and Services” pages on advisors’ website often garner high traffic and help clear up prospects’ questions so they feel more comfortable making an appointment. List the fees you charge as simply as possible on your site and include a list of the services you offer your clients. Consider adding a “Frequently Asked Question” section to list specific details about your individual programs and processes.
Though there continues to be downward pressure on fees in our industry, there’s also a looming shortage of financial advisors and more demand for financial planning services than ever before. To position your practice for success in the future, take steps today to bolster your value and justify the fees your charge for your work.