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Business Development 'Providing holistic solutions has helped me charge fee'

'Providing holistic solutions has helped me charge fee'

Rajesh Chheda of Finance Factory shares his experience of charging fees from clients.
Banali Banerjee Dec 6, 2016

How I started charging fee

I started charging fees in 2005. Initially, I charged only if it involved offering bespoke solutions. For instance, some clients wanted us to help with ancillary services. This was a time consuming process and we decided to charge for such value added services.

After 2013, I decided to shift to a pure fee based model by taking up the RIA licence. Before charging, I discussed the change in my business model with a few of my clients and asked whether they would be interested to work with me. They were open to the idea of paying fee.

Client reaction

Not all of my clients were willing to pay. Some felt that they could 'save' by doing it themselves. These clients bypassed me, made mistakes and soon realised their mistake. For instance, by investing online and through banks, they were stuck due to some compliance issues. Also, they realised that some products were not tax efficient. Eventually, they came back to me.

Fee structure

The fee structure depends on the client's portfolio and the level of engagement. I charge fee on AUM basis every quarter and also charge them for annual reviews.

Clients need different financial products and hence give strong preference to  advisors who give them holistic solutions to their problems. So providing a host of services under one roof helps us charge for our services.

What IFAs need to do to charge fee

Charging fee is very subjective as it depends from client to client. Some clients are not comfortable paying fees; they are comfortable with embedded commissions. In other cases, some clients find transparency and fiduciary relationship better (especially professionals and HNIs). They value this trust factor.  So you have to decide which type of clients you wish to work with.

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