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,
My advisors are pushing back on our fees. They are frequently hearing from clients they believe they are paying too much for our services. We are largely an investment firm and we have an institutional-quality lineup of analysts and portfolio managers. Clients, in my view, get every ounce of their fee and more.
One of the pushes has been that we need to integrate more planning into what we’re doing. My contention is that clients hired us to fill a need – as their investment expert. Most are extremely wealthy individuals who have other providers and we are a sleeve of what they are managing. It’s a specific set of strategies we offer to fit in a well-rounded portfolio.
I think we should stick to our knitting and do what we’ve always done and not veer off track. However, I also think we should be selling value and not price. Most of our clients couldn’t get the expertise we’re giving them for twice the price and in many cases they couldn’t access it at all.
How do I get my advisors to see this as clearly as I do?
Y.N.
Dear Y.N.,
What exactly is your business model? You have advisors and they are clamoring for planning, which indicates you are doing wealth management in some form or fashion and your advisors are having planning conversations with your clients. However, you talk about your institutional expertise and offering a defined investment strategy to fit neatly into an already allocated portfolio. It’s confusing what you are trying to convey.
I wonder if your advisors know how to tell the same story and if they are doing a good job re-telling and re-selling your clients so the clients know exactly what they are paying for and what they are getting.
Even the most successful, long-tenured firm can benefit from getting everyone in a room (even if it is a virtual room) and restating or updating the vision for the firm, the mission, the values, the target market/ideal client and the solution and why it solves something for the market.
Start there and consider it a refresh for your team. Let them ask questions and confirm or reconfirm what they believe to be true.
Once you go through this, it will be more evident to everyone what you stand for, what you do and how it is beneficial to your audience. Sometimes out of this exercise comes a need to rewrite some marketing materials or develop new client-oriented materials.
This may end up being an exercise where nothing changes, and everyone is completely on board. But given what you’ve written and the push back you are getting, give it a try. Approach this with an open mind and don’t assume what you know is what everyone knows. Use it as an opportunity to open the door to discussions.
Ultimately this will benefit you. You will learn where the disconnect is, you might gain insights into what your team needs and you will either confirm or recast how you are talking about the value you clearly add to your clients.
Dear Bev,
Is there a right way to price planning? We always included it in our overall AUM fee and many times clients undervalued what we were offering and how much work goes into the planning process. Then we stripped it out and we offered planning once every three years, at a price of $7,500 each time we reviewed and updated the plan with the client. Clients are saying they don’t need this refresh every three years and are pushing back on doing the plan.
What’s the right formula because we obviously haven’t figured it out!
A.Q.
Dear A.Q.,
The right formula is the one that works for your firm and your clients. I’m not being flippant. I’ve seen every single iteration and I’ve seen them all work, and I’ve also seen where clients push back about fees on many of them!
The important thing is that you are telling a story to your clients about the value you add. Your client experience should outline what a plan can do for them, why it is valuable, why updating it every three years in your view is critical, what exactly gets updated, the time invested by your team in working on the components of the plan and how it benefits the client’s life and experience. In many cases, clients don’t understand there are many elements that need to be reviewed such as philanthropic interests, review of beneficiaries, buying a second or third home or refinancing, educational funding and so on.
They might not consider all of the pieces of their overall puzzle, so it is up to you to educate them about the importance of reviewing it on a regular basis so that a crisis or unexpected event doesn’t hit and they are then unprepared to deal with it.
A mistake that advisors often make is assuming because you realize the value of this process and the ongoing updates, your clients do too. They need to understand how what you are doing is helping them so many times you need to connect these dots. Even long-term clients who trust you and know you benefit from the reselling and retelling.
You need a client experience that is laid out in detail and you can review where you are with the client on a regular basis. Make sure you have ongoing relevant education and information you are providing – not just canned market insights but useful, actionable information they can use in their daily lives. The more they turn to you for ideas and information, the more value they will find in having this ongoing relationship with you.
Review what you are doing and see if you might need a refresh in how you talk about it, and how you deliver it so that clients see, feel and understand the value.
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. 
