Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
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Dear Bev,
I have run a very successful advisory firm for many years and have made a lot of money doing so. I don’t have children and have not had to deal with college funding or the general costs of raising kids. I have plenty of money. Recently, I bought my dream car – a Maserati GT convertible. Yes, the car cost much more than my first house did over 30 years ago. But I drive a lot and this was an important purchase for me.
The problem is that clients have started commenting on the connection between my car (which I am excited about, have talked about it and have shown it off) and their fees! One of my longest standing clients, who I consider to be a friend, told me maybe it was time to start thinking about moving his $4.5 million to a discount broker who won’t gouge him on fees.
We get paid well, but we aren’t outrageously expensive based on the competition. We do active money management and full-service planning. Our clients get an exceptionally high level of service – we offer a number of concierge services, too.
I’m baffled. Do I hide my car? Not talk about it or drive my old Ford F-150 to client meetings instead, because it is pretty beat up? It doesn’t seem right to me. Many of my clients – and colleagues – spend twice this amount to send their son or daughter to a great school. I believe I am being judged unfairly. But I understand that perception is reality. What do I do?
E.V.
Dear E.V.,
It’s always a challenge – you want your clients to know you are successful and doing well and attracting business, but not that you are doing too well, at their expense! It is a fine line and everyone has their own filters on the world. Someone congratulates you while someone else finds it offensive that you are spending your hard-earned money on yourself.
It’s not a bad idea, when you show off the car or clients see it one way or the other to have a line ready such as, “Yes, I guess I was unlucky (or lucky) not to have children because instead of college educations, I can spend my money on the car I have always dreamed of owning!” This way you are making it clear that there are tradeoffs in life and you don’t have children that force you to make other decisions. I don’t know if you chose not to or could not have kids, so you need to use this type of language in a way that fits for you. You could say, “Very sadly my wife/partner/I were not able to have children so the money we would have devoted to them is available for me/us to do other things.”
Clients are increasingly fee-sensitive. They are learning about pricing and hearing from competitors who can offer them a better deal. Doing anything that raises a flag or brings up the fact that you are doing well, based on what they are paying you can ignite anger. It’s not necessarily fair or accurate, but it will happen.
Hit it head on with a statement or qualifier. You can also say things like, “I’m frugal in every other aspect of my life, but the car was a meaningful purchase for me.” (Don’t say any of these things I am suggesting if they are not even remotely true!)
There will also be clients who are excited for you and want their financial advisor to be extremely successful. They also have the money to buy a car like this if they want one – it’s all about choices. Your client with the $4.5 million could likely afford the car, but he might also be saving his money for other reasons or spending it elsewhere. I don’t think you need to apologize for your choices, but it is always a good idea to get the record straight in the event that some client looks at it negatively.
Hopefully more of them will want a ride and you can talk additional business while enjoying the open road!
Dear Bev,
I am so sick and tired of defending our fees. We do excellent work for our clients. I have lost count of the times clients who came to us were making bad decisions that were costing them money and we helped them save money and do things they want to do.
We have separate fees for planning and investment management. Too many clients think we are “double-dipping” and don’t understand these are two separate skill sets. I employ both CFPs® and CFAs and these credentialed people do not come cheap. But they do great work.
There is so much advertising about firms cutting their commissions and brokerage fees. Clients look at what we are doing and believe it is too expensive.
When you go to the auto mechanic they charge for what they know how to do, as do lawyers, electricians and home builders. Why do clients think they can attack us as if we aren’t professionals too?
B.W.
Dear B.W.,
Money. Unlike the auto mechanic, lawyer and electrician, you can go online and watch financial news and think you know about investing. How hard can it be to construct a financial plan, right? Why not just pick a set of diversified mutual funds and be done with it? This is often what investors ask themselves when working with an advisor.
The onus is on you to show and clarify the value the client is getting as a result of working with you. While you want to keep the process simple, you don’t want to understate the value a client gets from the planning and the investment process. Make sure you are clear about the client experience – what they are getting, the outcomes you can provide and how what you do impacts their life in a positive way.
Don’t be shy about sharing your client stories. The ones you outlined in your note where you saved clients some money or helped them accomplish something they didn’t think possible should be told. People can invest on their own, but they are often making mistakes that only credentialed professionals can help them avoid.
Continually engage with clients and remind them of your value. – I call this “re-selling,” where you find subtle and even not-so-subtle ways to review areas where you have helped them and where you can still help them. Clients don’t always remember what has happened. They need you to connect the dots for them on why they are in a better place – thanks to you!
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. The firm also founded and manages the Advisors Sales Academy. She is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
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Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here. 
