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  • Business Development How I charge a fee?

    How I charge a fee?

    Find out from Suresh Sadagopan of Ladder7 Financial Services, why and how you can be a successful fee based advisor.
    Daya Ragunathan Jun 9, 2017

    Most investors do not know what they want to do with their money, which is why there is a huge opportunity in the advisory business. “There is an old adage that if you don’t have a destination every path will take you there. Most investors are in this place and as their advisors it is our duty to help them identify their financial goals and figure out the best way to invest their money,” says Suresh.

    Why fee based advisory?

    Dispelling fears that investors will not be interested in paying fees, Suresh points out that he has been charging fees for over a decade and all his clients are happy paying a fee. “As fee based advisors we operate across asset classes; this keeps us on our toes and helps us earn respect,” he says.

    Another advantage of a fee based model, according to Suresh is that, unlike commission based advisors, fee based advisors have full control over their earnings. “The future is moving towards fee based models. As remuneration through commissions comes down, more advisors will start charging a fee,” he says.

    How to make people pay fees?

    The first step to having a successful fee based practice is to show the client the value he derives from the advisor. “You need to show the investor you not only give him the clarity on where to make his investments but also ensure he has a better structured portfolio, better tax efficiency, right choice of products and better goal alignment. As advisors, we also stop them from making mistakes. We are basically an unbiased, third party sounding board to clients,” he says.

    Another thing advisors can do to convince their clients to pay a fee is show them how much they save by taking your advice. “When I show clients that my fee is but a fraction of what they are saving by taking my advice, they are happy to pay my fees. I also try to alter the frame of reference to put things in perspective,” says Suresh.

    “A maid or a driver is considered an essential in most households, unknown to the investor he pays crores of rupees over his lifetime for their services. When I ask him, why he is unwilling to pay for the services of a financial advisor who will help him grow his money, I usually end up convincing him,” he says.

    “As long as we show them why they cannot do without us, investors will never say no to you. Fee is never a problem,” says Suresh.

    Have a query or a doubt?
    Need a clarification or more information on an issue?
    Cafemutual welcomes all mutual fund and insurance related questions. So write in to us at newsdesk@cafemutual.com

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    4 Comments
    Rakesh kumar · 6 years ago `
    Do you run fee only practice or fee based practice??
    Amit Kachalia · 6 years ago
    As the First CFP from Nasik, I have been into "Fee-Only" Model in Nasik & laer on in Thane, since 2008. Didnt face any problem in City like Nasik too.
    Reply
    Deepak Patil · 6 years ago `
    Although regulations may not allow a hybrid model, it is still feasible to charge a fee for advice as well as a routine "invested amount" based charge.The advisory charge may be one time while the routine charge will be quite like an annuity.Most advisors would loathe at the latter since charging for SIP amount based fee for a 5/7/10 yr SIP may become unpalatable to the investor.However, I have seen more opportunity come my way when I take a ONE YEAR SIP and enhance the ticket size at every annual review that the SIP renewal meeting offers as an opportunity.
    Prashant · 6 years ago `
    2vthings i wouldvlike to know. Is it cheaper for client to go for fee based investments or is it otherwise since SEBI and AMFI are running after the cost of the products? Second is does the customer know and understand that fee will be expensive than commission?
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