“Clients are not willing to pay fees for financial planning!”
This was the bold claim of a financial adviser in a recent LinkedIn post.
You might call his statement a ‘gross generalisation’ because, quite clearly, there are many people who do already pay fees for financial planning.
Yet such a statement may not be helpful to someone considering offering fee based financial planning. So, let us take a closer look at why charging a fee is important.
Financial planning is about value creation
Money is a means to an end, not the end in itself. It is what you can do with the money or what the money can do for you that matters.
This is why transactional advice that focuses only upon the money is often of limited value. Where is the value if your client is not experiencing more clarity, peace of mind, well-being, quality of life, and living in alignment with their core values?
The value of financial planning is not in having a plan; it is the process of planning on an ongoing basis.
Powerful conversations that have a client reflect upon their life, what they want from it, and the actions they are willing to take towards it are potentially life changing.
Is it worth paying for financial planning?
I came across an insightful article by Natalie Holt sharing research by Ernst and Young.
It highlighted that 45% of people (see article for details of the research group) were not prepared to pay for financial advice.
Who wants to pay for something that they see no value in?
I would suggest that the people who do not want to pay for advice have never collaborated with a top-notch financial planner. If they had then that 45% would shrink considerably.
When people get crystal clear on what they most want in life and the things that have the most meaning for them, then they will often move heaven and earth to get it (How to successfully sell financial planning).
Nothing commits people like money
I saw an online advertisement by a financial product provider offering FREE advice.
This is demeaning to the advice profession, and it is a lie.
It is no better than these ambulance chasing lawyers phoning you up to claim compensation for the accident you have probably never been in. The advice is not free.
People rarely value what they get for free.
I have found that when I have provided coaching ‘pro-bono’ the clients involved have been the least committed. I rarely do it these days because of that reason.
Financial planning is not transactional advice. It is a collaboration between the financial planner and the client to help the client live the life they want.
There is a significant responsibility with the client to take the actions that will make them successful and without skin in the game the commitment is not there.
When your client is willing to give you a significant financial planning fee, paid from their own money (not from a product), what are they demonstrating?
They are demonstrating commitment and saying, “I’m in because this is important to me.”
A financial planner comes to mind that I worked with a while back. He had experienced some people taking advantage of him where he had done work on the promise of further business and they had reneged.
How was this resolved?
By charging a fee before conducting the work. The right people were completely happy to pay the fee and the tyre kickers soon disappeared.
The right clients will pay fees for financial planning
It is true that not everyone will pay a fee for financial planning, but why would this be a problem? Our job as professionals is to engage the right clients, not anyone who has a pulse.
I would suggest that the right clients, the ones who value you and what you do most of all, show their commitment through paying a fee.
This is the primary purpose of a fee.
P.S. If you have not downloaded it already you can get my ‘Magical Client Meetings Every Time!’ report by clicking here. This shares the 10 essential keys to magical client meetings and gives you a scorecard that helps you make clear and consistent progress.
