Why and How to Raise Your Fees
Are you charging clients enough? How and why to consider raising your fee...
Last month we began a discussion about reconsidering your fee structure this year. If you’re like many advisors who offer clients an incredibly valuable and broad array of services, you may not fully grasp this value—or have trouble quantifying it—so you may be undercharging for your expertise and services.
If you’re a comprehensive financial planner, in addition to wealth or investment management services, here are several intangible (and invaluable) services you likely offer clients:
- You help your clients keep track of—and make more efficient—their financial affairs.
- You help your clients create an organized, diversified portfolio, and you stand between them and the dysfunctional emotional decisions people often make with their own investments.
- You help your clients get into the habit of saving (and investing) a portion of their income.
- You help people identify what is important in their lives, and prioritize their goals.
- You help people turn seemingly impossible goals into a routine that can achieve them.
- You help people bring the focus of their lives from retirement to the present.
Charging more for your services may not be only okay, but the right thing to do. It’s a different number for everyone, but you owe it to yourself to determine what your number is—and feel good about it. Determining whether you’re charging enough is a difficult decision, but being the low-cost provider is probably not going to get you to your goals.
Here are some points to keep in mind as you (re)consider your fee structure in 2015:
- Charge enough to live a prosperous life and be a role model to your clients.
- Charge enough to bring more services to your clients as needed or requested on an ongoing basis.
- Charge enough to sustain a business that will thrive and stay open for years to come.
- Charge enough to feel comfortable making investments in your business, allowing you to continuously improve upon your systems and technology.
- Charge enough to create a highly efficient business which frees you up to spend the majority of your time in front of clients.
And here are some reasons why advisors may hold back from charging an appropriately higher fee to clients:
- Years ago, when many advisors first got into business, a “fee-based” concept may have seemed foreign to clients
- Today, charging a fee for services to your financial planner is commonly accepted.
- Over time, advisors have put their clients through several smaller business model changes—rather than combining everything into one conversation—and haven’t raised their fees to accommodate these changes along the way.
- With every change you make to your business model, you’re going to expect SOME attrition; i.e. at least one client isn’t going to move with you.
- Therefore, if possible, make ONE change—and make it feel positive and better all-around.
- Advisors haven’t mastered the ability to effectively convey to clients the value of their services.
- If advisors lack confidence and excitement as they discuss the value of their services, so do their clients.
- Most clients are willing to pay more if they see that they’re truly getting more value from their advisor’s services.
- More often than not, the belief that it is impossible to raise fees is in advisors’ minds—not their clients’.
- Advisors don’t spend the time creating a reasonable plan so that they can transition to a new fee structure quickly and with conservative expectations. To do this:
- Compile a snapshot of all client assets.
- Do a rough but conservative profitability analysis.
- Figure out which relationships are draining or time-consuming (think the 80/20 rule) and therefore should probably be charged more.
- Advisors don’t develop systems which will allow them to touch clients more frequently and more personally than before the transition to a higher fee structure.
- What advisors offer going forward should be visibly different after a fee increase.
- Advisors need to create systems and client deliverables which give them the ability to mentally and visually demonstrate the additional value they offer clients.
FocusPoint Solutions offers assistance to advisors seeking to make their businesses more profitable and efficient through the development and implementation of a customized business plan which involves outsourcing. Only you can decide what best serves you, your clients, and your unique business model. In 2015 and beyond, if your time is freed up that you’re able to primarily focus on being a business owner and financial planner to your clients, you will be giving your business the highest chances of long-term success.
If you’d like to schedule a 30-minute demo to learn more about our virtual support team and technology offering, contact us at (866) 201-3034 or email@example.com. Our goal is customize a solution to address your unique needs.
Click here to view FocusPoint’s full brochure of services. Here are some real-life case studies involving advisors we’ve helped to successfully transition into a new business model, supported by our virtual team and technology. Finally, here are the starting points for service model options we offer to independent advisors.
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