If someone says, “Your fees are too high” it is either because:
A) They don’t know what you are really doing for them.
B) You aren’t doing enough to clarify what you do. (I’m making the assumption that you DO provide significant value that corresponds to your fees).
The solution to either problem is simple.
You first have to ask yourself the honest question: Are your fees too high? If the answer is NO, then you have a great opportunity to share your “Value Conversation.”
When fees are presented only as AUM-related, then the only value really is the investment process that drives the investments and the performance of the accounts. There are many problems with presenting your fees this way as the industry changes, and new low cost options continue to infiltrate the investment business.
The key is to present your value with the precision and confidence that you deliver your value.
If you’ve ever been asked a question like these below, it may be time to rethink your value discussion:
[Important clients calls the office and asks an innocent question] “What am I paying these fees for?”
[Prospect asks the financial advisor] “How do you compare your services to XYZ Robo-advisor where I would pay thousands less each year?”
Several firms have begun changing the way they present how they get paid. We call it a Value Conversation. It is not the elevator statement or typical vanilla value proposition but an in-depth, memorable description of what you do for the fees you receive.
Formula for Creating Your Value Conversation
Consider presenting your value by segmenting it into three distinct categories that each have an associated fee. For instance you could say:
“There are 3 things we do” and then break up all of the things you do into 3 distinct categories.
For instance, one advisor we work with states, “There are 3 things that we do: Complete Financial Planning, our Investment Process, and Family Office Services.” He writes each down while he says it and then discusses each in detail. He then associates a sample fee based on the value for each of the three categories. In closing the conversation, he presents one overall, average fee that is less than the 3 individual segments. His clients understand it and they know his value.
You may not be ready or able to change the model in which you charge fees. But you can change the way you communicate all the value you bring. Think about changing the way you discuss what you do so that every client knows you are worth more than what he or she is paying you.