The current pressure on the fees you charge your clients is a looming crisis in the financial advice business. Low-cost providers, regulatory “suggestions”, supposed advisor advocacy groups and even some advisory firms themselves are questioning current fee levels.
Want some proof?
Just look at the onslaught of the so called roboadvisor. Well-intentioned technocrats have partnered with Wall Street types to turn the personal advice business into algorithms. They believe fancy websites can replace human interaction.
My suggestion…keep them out of your business.
In reality, those suggesting lower fees don’t understand your business. They don’t understand the value you bring to your client relationships. They don’t understand basic economics. Today, there are more clients who need your help than you could possibly serve.
Want some more proof?
The fastest growing business units of what we used to call “discount” brokers are their institutional custody divisions. They want your clients assets because they know they can’t get them on their own. They understand your value.
And they want a piece of the action.
Now, don’t get me wrong. This is not a blanket argument. Some advisors are really lousy at what they do. I’m not just describing the relative few with compliance recidivism. This also includes advisors who take their clients for granted. The ones who fail to deliver on real client commitments.
Price is only an issue in the absence of value.
If you clearly deliver on a value proposition that helps your clients achieve their goals, you deserve to be paid well…very well. And you shouldn’t apologize for your tax bracket by discounting or in some cases giving away your fees.
Plug the holes in your pockets.
The vast majority of discounted relationship are not the result of client requests. They come from discounted fees volunteered by advisors who questioned their own value. Advisors who were negotiating against themselves.
Even Vangard, the low-cost investing king, admits that advisors can add about 3% in net returns by providing added value. Value that’s tough to quantify when you’re establishing your pricing policies. Value that comes from the things you do in the normal course of business. Ranging from basic risk management strategies to good old-fashioned handholding.
Don’t let mainstream thinking set the direction of the fee debate.
Stop wondering if your fees are too high. Saving your clients money (something you do all the time) doesn’t need to mean taking money out of your own pockets. You need to be fair to your business and to yourself.
Should you increase your fees?
Take time to honestly evaluate your value proposition. And the way you deliver on your promises. My bet…you deserve a raise.
Need some help?
I’m available for a complimentary Breakthrough Session. We’ll spend 45 minutes reviewing your value proposition as well as your pricing strategy. Just go here to secure your private time-slot.