Approaching Fee Conversations- Tips for discussing fees [Best Practices]

Bringing up the topic of fees can be uncomfortable at times, however broaching the subject in the right way can lead to a strong long term relationship with clients. Having a strong framework can be particularly helpful when discussing costs. 

Ways of approaching fee conversations

A good thought process when ‘pitching’ your fees is to remember that your clients will expect that there is a cost to doing business with you, and provided they can see that they will receive value for that cost, and they are confident that you will provide good advice and continue to deliver an enjoyable experience, they will accept your fees. There is no need to be apologetic, or nervous about your fees, this is simply another smart financial decision that you are assisting your clients to make.

Given your ethical obligation under FASEA to ensure the client is receiving value for money, you will be able to make a value assessment easily, with the enhanced knowledge of your clients desires and needs via the Lumiant process. Provided you are satisfied that you’re delivering value, back yourself  and your clients will sense this confidence. 

Don’t wait for your client to ask about your fees, rather confidently outline your pricing structure and quote your fees at the appropriate time:

• Let your new enquiries know you don’t charge for your first meeting, rather you see that as an opportunity for you both to see if you can work together and for you to assess if you can provide value. Also explain in your initial call that by the end of that first meeting you’ll know whether or not you can help, and let them know what your fee to proceed will be (and they’ll have sufficient time to think before making any commitment). You may or may not choose to quote an indicative range at this point.
  

• Explain the structure of your fees at the end of the first meeting, including how they work, the timing, and the fact that part of your advice will include the most cost effective and tax effective way to pay your fees. If you split your Engagement from your ongoing fees, quote the specific engagement fee at that point, and note that the cost for your ongoing services will depend somewhat on the complexity of their financial plan - but you will quote that fee when you present their plan and again, they will have sufficient time to think about that before committing to the ongoing component of your service. Again, a range can be helpful at that point if you’re able to provide one.
  

• When presenting your advice, articulate your ongoing fees, and where they will be paid from. Demonstrate the likely outcomes of your advice net of your fees. It was shown in Elixir’s research that a key success factor in a pricing model is to maintain the ability to charge project or new advice fees if an unexpected change occurs that  requires you to provide new advice. Clearly explain that your annual fee includes all of the services that you specify, but should something new arise that you haven’t already factored in, you may need to quote a fee for that additional work at the time.

Hot tips for discussing fees

Things to remember when discussing fees: 

• Detail exactly what the client will receive. Within financial advice, clients are generally looking for quality over a bargain. Advisers can justify their fee by detailing what the fees cover. Not only the steps in the process, but importantly, the outcomes that your advice will help them achieve. They should remember to include the Best Life Plan that clients are able to access at any point in time. Clients are not only paying for the face-to-face contact, the intellectual property in your strategic advice, the ability to have a trusted confidante to explore ideas with, but also the ability to track their financial progress across all their investments, on the one platform.
  
• Show them how far they’ve come already. At this point the clients will have seen a preview of their Best Life Plan, and populated a large portion of it with their information. Advisers can use sunk cost bias to their advantage, by communicating how much the client has already invested in the platform. Clients can see how easy and enjoyable the process was, as a taster for the rest of the Lumiant package. 
• Demonstrate they can afford you. When completing the financial modelling that accompanies your recommendations in your Statement of Advice, be sure to include your fees as an expense, so you can demonstrate their likely future outcomes net of your fees. Help clients to see that they will generate a return on investment on what they pay you, and be sure to accompany discussion of this tangible return with the intangible benefits the client enjoys, their increase in confidence, their peace of mind etc (customised to match what they’ve articulated as being important to them).
• Never shy away from a conversation about fees. If clients have questions about their fees, either in the initial stages, or later in your relationship, don’t automatically treat these questions as objections. Do not hide or try to minimise your fees, rather discuss them in context with the value you’re providing. If you assume the client is objecting about your fee, you may come across as defensive or fearful, when in fact, the client may simply be seeking clarification and will  pick up on your confidence of the value you’re providing.