Talking to clients about fees
"Clients really only care about two things: the services that advisers provide and the fees they charge and once they've been provided with these inputs, they will make their own determination as to whether those services hold value," according to US psychologist Dr Jim Grubman.
Grubman, who has been referenced in new research released by State Street's SPDR University, says that given these client attitudes, advisers should hold their fee discussions accordingly.
"Rather than expecting clients to compensate you for the big-picture benefits of helping them reach their goals and lead more secure financial lives, you need to begin your fee discussions by listing the specific line item services you provide and establishing what those services are worth," he said.
Grubman said this approach created "the essential service/fee balance that enables clients to define your value for themselves".
"In fact, viewing the fee discussion from your clients' perspective can help you to more effectively communicate your fees," he said.
"When I ask advisers what they mean by value, they invariably start to list the services they
provide: help with retirement planning, integration of multiple accounts, or management of taxes," he said. "What they don't realise is they can more effectively communicate the value of an advisory relationship by just listing those specific services at the outset of the fee discussion."
Grubman said that talking about the "value I provide" muddled a fee conversations.
"Advisers should discuss the services they deliver, the money they save clients, and the risks they help them avoid," he said.
AUTHOR
Mike Taylor
Recommended for you
The director of Ascent Investment and Coaching, Michael Dunjey, has been charged with 33 criminal offences.
Adviser Ratings’ latest financial landscape report finds there is a demographic of advice practices achieving an average revenue of $5 million, with only 3 per cent of practices overall seeing a revenue decline.
The FAAA is calling for regulators to take a partnership approach with financial advisers regarding incoming legislation, rather than treating the industry as “guinea pigs”.
There have been strong numbers of returning advisers this year so far, according to Wealth Data, already surpassing the same period for 2024.
