How to Talk About Fees Without Losing Client Confidence

The discussion of fees is amongst the most picky and important ones that financial advisors have to learn to carry out. Customers are more knowledgeable, and more frequently have high expectations, and are increasingly challenged to come up with numerous choices they can make. Consequently, whether one chooses to build on trust or lose its credibility, the manner in which the advisor explains the cost can be what matters. When done badly it can seem defensively or evasively; it can be done well, as a further chance to assert the theme of transparency, value and professionalism.

Start With Transparency

The main technique in gaining trust is honesty regarding charges since the very initial dialogue. Clients start to doubt the authenticity of anything and everything being said by an advisor when they get the impression that costs are lurking around somewhere or are being disclosed halfway. An explicit explanation of the way you charge your business, be it a percentage of the assets under management, an hourly fee, a fixed-fee, or a combination of that- will provide a clear indication that you would rather be honest than be convenient.

Transparency is not just about stating the numbers. It is also the clarification of the rationale of the fee structure in the situation of the client. Just to give an example, explaining why a flat annual fee can be beneficial to prevent conflicts of interest or why an assets under management model may align your incentives with those of the client to foster his or her long-term growth will cause understanding and not suspicion. Once they find the sense, the clients will feel more capable of accepting the expense.

Focus on the Value Provided

Discussing fees without context often sounds defensive or transactional. Rather, advisors ought to relate billing to the specified worth of what they supply. This is speaking about how your constant guidance keeps the clients on track through turbulent times, how taxes may be saved through planning to reflect the long term, how forward thinking pays off towards the significant life targets such as retirement or college funding.

Putting the issue in terms of what they can achieve will enable clients to think about the fees not as a burden to live with but as an investment in professional advice. This is to get them seeing your services not only as portfolio management but rather in totality as a full financial support package, which also covers all aspects in their life. Such a tactic is bound to lessen the stalwarts of fees since it focuses on what they will get as opposed to the amount they have to disclose.

Use Clear and Confident Language

The common mistakes advisors make when they are discussing fees are hedging, apologizing, or they sound uncertain. This inadvertently sends the message to the clients that the advisor who offers it does not even believe it. Rather, be assertive and down-to-earth and use words that demonstrate professionalism and clarity.

An example of this is: instead of stating that you know the fee may be high, it would come out as much more convincing to say my fee is organized in this fashion to make my recommendations independent. Never use industry jargon, unless the client is well conversant with it. Direct, non-fancy language does indicate that you are comfortable with the prices you charge and more importantly comfortable with the value you are offering.

Leverage Technology to Support the Discussion

It is possible to make such dialogues more objective and less emotional with the help of such tools as a CRM designed to be used by financial advisors. Showing the development of time using client milestones, portfolio performance, and meeting notes will be as easy as a pie to show how your work provided the development of the time. This makes the value story concrete rather than abstract.

Along with that, the best CRM software can also aid in consistency among your team and, thus, every client will get to feel your dedication to the promises of transparency and service. Most clients will go out of their way to pay you fees because they will have realized that even something like the fees is planned.

Make Fees an Ongoing Conversation

Most advisors discuss fees with a new client once and never bring it up again. Yet clients’ needs, goals, and expectations evolve. By incorporating fees into the regular review meetings it is possible to avoid any surprises and a face-saving subject will become a normal topic. It also gives you a chance to demonstrate how your services- and your value by extension- have changed in the light of changing fortunes.

An example would be to mention any new tax strategy, opening of a new planning tool or even bringing in the best CRM for financial advisors to help in your service delivery and by mentioning these changes you will show that the fee is not permanent, but instead it is due to the ongoing effort to improve the practice. Demonstrating your reinvestment in your practice, the clients will be aware that their fee is used to continue to improve their practice, not merely covering historical activity.

The discussion of fees sometimes makes both the clients and the advisors uncomfortable; however, there is no need for that. In being open with them, contextualizing them in something of value, using confident language, frequently going back to them and clarifying their progress through tech is how advisors can use an otherwise source of friction to solidify the confidence of the client.