The initial stage
I started charging fees in 2004. Initially, I charged my clients a small fee and increased it over time after gaining experience as the plans and advise that I stared offering became better and more detailed. I did not encounter much resistance as the fee was not high in the beginning. When my fees crossed Rs. 25, 000, I did encounter people who felt that they may not be able to afford us. They were hesitant to pay me a higher amount for my services. To tackle this, I started focussing on those clients who were willing to pay me fees.
How to talk to clients about fee
I used to tell them about the services that I would be providing and consequently the fees I would charge - it was as simple as that. I was quite upfront about this. I used to talk about fee unapologetically, without flinching. I think that helped. It is not true that people are not willing to pay fees. We are afraid to ask. We need to position our services and show them the benefits and I am sure that many of them will pay.
The mind set problem
Some clients may not be willing to pay as many distributors do not charge a fee and tell their investors that they offer advice for ‘free’. This ‘free’ advice is actually not free. They get remuneration based on products that they are able to sell. Even investors know that when products are sold, there is a commission embedded. Many people are fine with such embedded commissions rather than direct fees. It is a mind-set issue. This has to be broken.
Fee structure
We charge a flat fee for preparing a plan and an AUM based fee for on-going services. The flat fee can differ from client to client. On-going fees are typically charged on a quarterly basis. The plan fee is taken upfront.
Advice to fellow IFAs
The approach has to change. We are not confident enough to ask for a fee. We need to upgrade ourselves to the point where we are confident that what we offer is good value to our clients. Once we ourselves are convinced, we need to communicate our value proposition in no uncertain terms to the client. With this approach, clients would take you seriously and lot more conversions would happen.
Also, it is a big myth that people who pay or who can pay are in the metros or in big cities. I have clients from smaller cities and they pay the same fee. It is just a matter of conviction. We need to be sure about ourselves and not accept clients who are not willing to value our services appropriately. There are enough and more people in any city or town who are willing to pay. You just need to find them and position yourself and your services to them.
