When I first started in the financial services industry in 1989, I was given a manual and a video of how different commissions work. Back then I remember having this VHS video to help me understand compensation. I wish I kept it to see how much the world has changed. Imagine you are sitting with a new prospective client and they ask” how much does this cost” and you hand them a video and a manual to explain how much it costs. Understand that compensation is all about proper disclosure, but having a simplified answer that is easy to understand and remember is critical in the trust building process.
Do you have a scripted answer? Is it easy to understand and remember?
Do your clients understand and remember, or do they ask you again at progress update meetings how your fees work? Is it in dollar terms easily divisible into a monthly dollar cost? Or is it percentage and dollar terms, or only percentage terms?
I cannot remember the last time I purchased a major item such as a home or car or anything that is a percentage, which does not include dollar terms. A common mistake advisors make is not having a clear scripted answer to the question” how much does it cost? “.
To test this point even further, many advisor do not record conversations they have with clients. If you want to have better conversations, record them with the client’s permission. Then let a trusted colleague or coach help you by giving feedback. You cannot learn to play better golf by watching it. You must practice it. By practice, I mean by recording your conversations, playing them back then improving your conversation by having a clear, simple and compelling statement to answer the question ”how much does it cost?”
Listening to you answer the question "how much does it cost," will help you become a better advisor. It will also help your clients see the trust and conviction when you have a simple, yet compelling answer to a very common question. I am not going to give you an answer here, because that is unique to each practice. Each practice may have different company requirements, cost structures, products and services. However, each practice must have a clear and simple, yet compelling answer.
There is lots of simple recording software on your smartphone that you can use to record conversations. One app I found easy to use is Dragon Dictation by Nuance software www.nuance.com. To implement this idea, record three meetings with clients and prospects, then play it back and listen to your answers.
Can you improve your answers and build more trust?
What do you say when you talk about fees? If clients are 100% convinced and confident of your answer, then they should be handing over dozens of referrals to you. Do you have every client who works with you give all of their key contacts in their smartphone for you to talk to? That is the ultimate proof that they are confident of the value you bring to the table when you talk about cost.