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I ask advisors what question from prospects gives them the most difficulty. Most often, the response is: “How do you justify your fees?”
It’s a question you are uniquely ill-suited to answer.
Here’s why.
You’re not qualified
I know it sounds odd to say you’re not qualified to justify your fee.
Think about how arrogant it is for you to place a value on your services.
When you consider taking a course or making a major purchase, do you rely on the vendor to tell you whether or not it’s worth the money? Or, are you the best person to make this determination?
Why apply a different standard to your prospects?
Here’s a better response: “I can tell you the services I provide and how I intend those services to benefit my clients, but only you can determine the value they bring to you.”
This response has an additional benefit. It talks up to your prospect. It empowers them. It shows you respect their intelligence.
It’s not a given
When I’m asked by advisors to provide a justification they can use to respond to the “value” inquiry I tell them their premise is flawed.
Your value may be much higher to an unsophisticated widow than it is to a Ph.D in finance.
For some clients, your fee can’t be justified. You’ll only lose credibility trying.
Clarify
In my previous career as a lawyer, I prepared clients for having their deposition taken. A cardinal rule was: “Don’t answer a question you don’t fully understand.” If they were in doubt, their response should be to ask for clarification.
Do you understand the motivation for the “value” question? Would the same response be appropriate for all clients, regardless of their age, income, goals, and level of sophistication?
Of course not.
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Instead of explaining why you believe you add value in excess of your fee by referencing the various studies on the subject, ask for clarification.
What if you responded: “Can you tell me more about the ’value’ you are looking for in an advisor?”
The answers could range from: “I’m looking for a calm, reassuring voice in volatile markets,” to: “I want an advisor who can tell me when to enter and exit the markets.”
You may be able to meet the expectation of some clients, but not others.
Resist the urge to respond to the “value” question before the prospect puts it in context.
Dan trains executives and employees in the lessons based on the research of his latest book, Ask: How to Relate to Anyone. His online video course, Ask: Increase Your Sales. Deepen Your Relationships, is in production.
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