Overcome the Fee Discussion by Focusing on the Things that Matter to Your Clients
Among the many trends affecting the way financial advisors must operate these days, fee compression has been the most impactful. The discussion of fees charged by advisors has moved to the forefront due to the low costs and transparency of digital advice platforms and the highly competitive arena in which they find themselves. As a result, clients are more willing to confront their advisors on the subject of fees and the value they receive in exchange for them, catching many advisors off guard.
Some advisors are not sufficiently prepared for the fee discussion. Some actually fear the prospect of such a discussion and hope to avoid it altogether. You can’t avoid the inevitable, so you best get prepared. Successful advisors have learned to welcome this discussion as a chance to illustrate how they are unique and how they add value to the relationship that goes beyond justifying their fees. They make their clients feel as though they’re getting an incredible bargain.
Value is in the mind of the beholder
Top advisors understand clients will only question their fees in the absence of value. So, they approach the relationship with the confidence of knowing they can and will deliver value for the fees they charge. How do they do that? First, by understanding how a client or prospective client perceives value in terms of what they expect from the relationship. That perception can vary widely from one person to the next, so it’s vital for advisors to gain that understanding and tailor their approach accordingly.
Next, it’s critical to understand that clients don’t work with financial advisors strictly for their investment advice. If they did, they would simply shop for the advisor with the absolute lowest fees or sign up with a robo advisor. Clients need more than that. Though many may not realize that, they recognize value when they see or experience it and then begin to wonder how they ever got along without it.
When you can deliver real value, fees are secondary.
Most high-net-worth clients don’t want a cookie-cutter approach from an advisor. They want the advisory relationship to be about them and what makes them feel content and special. If you can deliver on that, you’ll have a loyal client willing to pay what you charge. You accomplish that by working holistically with each client to address and anticipate what’s important to them. Using the following multi-faceted, client-focused framework as your value proposition, you can ensure you’re hitting the critical touchpoints clients respond to while providing the individualized, high-touch service they want.
#1. Stand for objectivity
The greatest value you can bring to a client is your impartial and unbiased view of their situation. Many clients are unaccustomed to frank conversations about their finances, but they come to appreciate it. Always remind them that is your most important function as their advisor.
#2. Be their accountability coach
Along the same lines of frankness, a good financial advisor is willing to hold their clients accountable for their decisions, especially if they diverge from a plan or strategy on which you both agreed, or it could lead to a costly mistake. Your clients will thank you later.
#3. Be a proactive planner
Knowing and anticipating a client’s life events is a way for advisors to demonstrate their proactivity in helping their clients keep on track, whether it’s to pay for college, exit a business, or transition into retirement. Most clients don’t expect this, but they welcome it.
#4. Educate to empower
As a financial advisor, you are (and want to be) the primary source of financial education for your clients. When you educate your clients on the strategies you’re employing, they feel more empowered and less concerned about their financial future.
#5. Be their partner
Clients respond more favorably to an advisory relationship when they know their advisor is vested in their success and sitting with them on the same side of the table. You should constantly remind your clients you are their partner in helping them achieve their life ambitions.
The Bottom Line
With that as the framework of your value proposition, you can be confident in converting an uncomfortable discussion about fees into an opportunity to explain your services and how you add value. You never want to compete with other advisors based on fees because there is always someone who will undercut you. But they won’t be able to compete with you on value and, in the end, that’s what matters to clients.
Watch this 3-minute video to learn how our workshop ‘Become the Obvious Choice’ will help you get selected over the competition regardless of your fees.
Making yourself irreplaceable and priceless in the eyes of your clients is discussed during the 1st day session about differentiation.
Workshop experience includes three 3-hour workshop sessions, workshop materials, follow-up email program and a follow-up group coaching session. Call 941.346.1166 for discount pricing for multiple Advisors attending from the same branch.
Detailed agenda, testimonials and other information available on the event page.