Although there seems to be plenty of information on the process of increasing your financial planning fees, there is far less on the thinking behind it.
So, in this article I am taking an alternative look at fee charging.
Read on to discover:
1. How most firms set fees.
2. A different way of thinking about fees.
3. What clients pay for.
How most financial planning firms set fees
Most firms seem to set their fees by looking at what other firms they perceive as similar to them are charging.
Some firms then charge less because they want to offer value for money. Others charge a very similar amount because it seems to be the going rate. And others charge more because they believe they offer a premium service.
So far, so good.
But the problem with comparing yourself to others is that it comes from a mindset of believing what you are offering is a commodity. If you think like this you are giving yourself very little room for manoeuvre.
Fortunately, it is entirely possible to approach fee charging in a whole new way.
What are you charging a fee for?
In the ‘Client-centred financial adviser’ book I wrote:
‘The problem that many practitioners and firms create for themselves is completely misunderstanding what they can actually charge for. The vast majority of the profession thinks it is charging for services and by doing this it is reducing what they do to the status of a commodity and inviting comparison. For example, by working on the level of providing products or solving financial problems then it is unavoidably offering a service which, no matter how good, can only attract a certain fee.’
Going back several years a coach I worked with helped me better understand fee charging. He helped me realise two particularly important things:
1. Most professional people will only give potential clients a relatively small amount of time before they expect to be paid.
2. Most professional people are very quick to diagnose a client’s problems and then jump in with a solution.
Although these points can seem to make sense they are also what confine people to charging some variation on ‘the going rate’.
So, it also presents an opportunity to be different from the majority. But where can you begin?
It does not begin with what you do; it begins with who you are being
Michael E. Gerber wrote a best-selling book called, ‘The E Myth revisited‘. It is a book about how to be successful in a small business and he very astutely wrote:
‘The work we do is a reflection of who we are. If we’re sloppy at it, it’s because we’re sloppy inside. If we’re late at it, it’s because we’re late inside. If we’re bored by it, it’s because we’re bored inside, with ourselves, not with the work. The most menial work can be a piece of art when done by an artist. So the job here is not outside of ourselves, but inside of ourselves. How we do our work becomes a mirror of how we are inside.‘
So, the work you do with your clients, the value you create, and the fee you charge are, first and foremost, a reflection of who you are being.
Who would you need to be to…?
*Go really deep on understanding your client and what makes them tick.
*Listen to someone like they have never been listened to before.
*See new possibilities for your client where they don’t.
*Inspire your clients to play a bigger and better game of life.
*Have your clients be willing to confront their fears, worries, and concerns.
*Allow yourself to be very quiet on the inside and follow your intuition.
*Confidently ask for the fee you want and have people willingly pay you.
All of these have the potential to hugely increase the perception of value and yet they are often neglected by advisers.
Limitation creates value
A truth is that the fewer people that can do something, the more it becomes worth.
If I want a financial product or to invest some money, there are thousands of advisers that can do that for me. Yet very few financial planners create a powerful, potentially life-changing experience with their clients.
What people are really paying for is the degree of difference you can make in their lives.
So, rather than thinking about what you do as a commodity, how can you deliver what you do in a unique way that creates massive value for your client and is incomparable?
If you want to increase your fees this is the starting point.
P.S. You may want to take a look at ‘How to successfully sell financial planning’. Click here.