There is always a conflict in most financial advisors mind when it comes to talking about fees - how much should you charge for your services and what are the parameters to consider while setting your fees?
We have noticed that some weird process happens in our inner world (i.e. in our mind), when we have to talk about fees. It is one of the most complex things to handle. One of my advisor friends once told me “I can handle everything but not the fee conversation with prospects”. It’s like I can draw, but I can’t not put colors in what I draw.
Do you have an arbitrary fee structure?
Most financial planners and advisors set their fees arbitrarily. When I got into this financial advisory profession, I had no idea how much I should charge. I went to a FPSB program in Mumbai and the only question I asked all speakers was-”How much do you charge?”, for which I never got a clear answer. Some said “Well, It depends!” I was new to this profession, the number that came to my mind was Rs. 5000 and I set that as fees for my services. My journey started with that number.
Let me share with you some points about “fees conversation” today.
1. Only communicate value and not fees
When you meet your potential client, don’t talk about fees directly, rather – start the conversation with, how you can add value to their financial life. By having you in their financial life, what difference it is going to make and what changes they can expect. Give them the ‘before’ and ‘after’ scenario changes. If you have five steps involved in your process, talk about value that each step is going to create in their financial world. When I talk to any potential client, I do not use word “fee”, I use the word “financial commitment”. Generate commitment in your potential client’s world. If you generate commitment, they will do everything required to become your client.
But you will ask what if someone asks you directly – “What is your fee?” In such situation, don’t hurry up. Tell your potential client, “I will surely tell you about my fee but before that can we have a conversation, so that I can find out what your actual needs are? I will be able to figure out what value I can add to your financial life. I know fee is important but to serve people, I have conversation with them first and then discuss fee.”
What is fee? Fee is the sum charge of service that you provide. We invite you to remove the word fee with cost. What is Cost? Cost is the monetary value attached with something that you create for someone. To get anything new in life, it comes with a cost, whether it is a painting or a financial plan or an LCD.
2. Move your conversation from affordability to possibility
Don’t let your potential client get stuck in the “affordability” conversation. They came to have a conversation with you because they saw some possibility in your work and services. When someone drops an enquiry on our website, I ask them, “What made them drop an enquiry? What’s on their mind that they would like to achieve?”
People do not pay for goods and services; they pay only for their dreams! They pay for the possibility! The more you keep the possibility conversation alive, the less you will have to talk about fees. The more they can see that you are the right person and can help them design the kind of financial life they want; fee will not get in your way.
To give you a small example, when someone comes up with “I need to ask my spouse before making a commitment”, it is a clear indication, that the person is still in ‘affordability’ mode. In such situation help your potential client to shift to ‘possibility’ mode.
3. It is not about you, it is about them
Where does the decision happen? Is it in your world or in client’s world? The final decision always happens in the client’s world! So the conversation you have with your potential client has to be about them and not about you. Every conversation has to create impact in your potential client’s financial life. Get them in touch with the “cost” they are paying because of not having a financial expert in their life; show them the impact it is having on their wealth and how much they could have saved if they have a financial planner or advisor. Help them to get in touch with their inaction and personal finance mistakes. Ask an uncomfortable question which clearly shows them what a disaster they have been till date.
The more they see the cost that they are paying, the faster they would like to become your client. Let me give you an example - If you find someone is having too many junk financial products, just help that person see the huge cost he is paying and the low returns he is getting - that way the prospect can clearly see the cost he is paying in his financial life and how he is destroying his wealth, not creating it.
4. Bring balance where there is imbalance
Your sole job every day is to find someone who is experiencing imbalance in the area of money. Sit with that person and help that person gain balance. The more you help people in getting balance, the more it creates an opportunity for fair exchange. Let “fee” be an outcome and not a barrier for having people experience your work. It is wise to receive and give wisely. Every day continue to keep asking yourself – “How can I give others, what they would love while simultaneously receiving what I would love?”
Remember – when service is rendered payment becomes due
5. Create agreements
It is all about creating agreements. Value is nothing but agreement. Every advertisement that you watch on TV, is trying to create an agreement with you. Someone says, Bournvita is good for kid’s mental development and someone says, a 10 rupee soap is made out of sandal wood oil. No sale happens outside of an agreement. You win the moment you are able to create an agreement. You can sell sand at the price of gold, if you can create agreement. I am not asking you to con people - all I am asking you to do is focus on creating agreements. When you are able to create strong agreements, the fee conversation is taken care of. When I say create “agreements”, make sure you check that whatever you are saying to your prospect client is being understood by him and that he is agreement with that.
- Ask him things like – “Would you like to create a financial life, which you always dreamt of”? , They will obviously say “Yes”. That’s an agreement.
- Ask them “Do you want to avoid living a financial life which you have led from the last 5 years? Let’s change that, what do you think? ” And the potential client will say,“Yes, I really don’t want to my future to be like my past”. That’s an agreement between you and him.
- Ask them “Do you see that after this whole exercise, your financial life will be very different, simple and more robust? Can you see that, do you want it to happen”. And the client in all probability will say “Yes, yes, yes. That’s what I need, when can I start? “
Can you see how “creating agreements” de-focuses the fees conversation!
6. Become a messenger
The first thing you need to do is spend some time and design the message that you want to communicate with every investor. Once your message gets on paper, become a messenger and continue to communicate your message with the people you meet. By message I mean your story. You have to keep communicating your story with the world. Go on an outrageous rampage to tell your story. Look at what story is supporting your value. At the end of the day you are not selling your services you are selling YOU and the potential buyer is interested in BUYING YOU.
If I have to share our example, our books, blogs and each product and services gives one simple message – “How to make personal finance simple for the common man”. We focus on that and share with everyone on how we are on that mission and how it is an easy thing and we will make sure it happens in their life too. We will be there for them - we keep communicating this to the world.
7. It’s not about fees, it is about YOU
I have talked to almost 500+ people till date on fees! And this is what I have observed from my experience – iIt is not about fees, it is about the relationship you share with money. It is about asking questions that builds safety and trust in the other person. You got to first believe that you are worth of receiving BIG cheque. If you think “I am just a financial planner” you are demeaning your self-worth. You are working hard for money to enter their life. Look at yourself as a millionaire maker, who helps people produce wealth. First look at yourself as a powerful person, see yourself as a true transformer who can really make a difference in people’s life. If you really believe that you are just another person, who can just create PDF’s out of software and nothing else, it will be tough for you in this profession. So it’s not about fees, it is about you.
What you can do in this case is “Practice speaking your fees”. I am not joking! Look into mirror and check how comfortable you are with your fees. If you experience loss of power while speaking your fees, it means you need to strengthen your relationship with money.
Conclusion
In the end, fee is just a number and nothing else. When you communicate value, you get friendly with your fee/number. Look at what kind of meanings you have attached around fee conversation. If they are supportive – go ahead, but if they are non-supportive, just flush them out. Your potential client wants you to talk about money, they expect you to talk about money so don’t let them down. Practice speaking your fee, get comfortable with your fee first.
This article is written by Nandish Desai, Financial Coach - www.jagoinvestor.com. This article was first published on their advisor blog www.jagoadvisor.com, which helps financial planners and advisors to build their advisory practice
