Fees and fee charging are now a fact of life for financial professionals and yet it seems to be an area that creates far more challenges than is necessary.
Common questions that come up for advisers are:
What to charge for?
What to actually charge?
How to charge?
When to ask for the money?
How to ask for the money?
How to raise fees?
Have any of these questions ever seemed like a challenge to you? I think for all of us who charge fees they have at some time or another, so you are definitely not alone.
Arriving at your fee
There are all sorts of solutions around from experts in this area. One example is the formulaic approach, which I am sure many people are familiar with. The idea is to work out how much you want to earn, how much time you want to work, what your costs are, and factor in whatever else seems relevant. The result is some kind of rate that then becomes your fee. All very logical.
Probably the most common way of all that advisers set fees is simply to look at the market and see what others are doing. From here they either charge less (for a ‘competitive’ fee), the same (because it seems to be the going rate) or more (because they offer a ‘premium service’).
However, these kind of logic based approaches often do not help people because if an adviser experiences uncertainty, self-doubt or insecurity around fees and fee charging then it will continue to be an area that seems full of difficulties.
Look inside, not outside
When we feel uncertain the solution is not in looking outside of ourselves at what others are doing because this tends to create even more insecurity because, inadvertently, we are reinforcing the idea that we are not able to come up with our own answers.
The fact is that every adviser and firm has a fee level that is uniquely right for them, their business and their clients. But it has to come from you, not someone else. This is not to say that applying a formula or any other system is wrong but it all has to do with the feeling you are coming from. Decisions made from a place of fear and uncertainly are rarely the right ones.
Asking for your fee
The reason it seems difficult for people to ask for their fee is because they have a ton of unnecessary thinking around it. For example, they feel uncomfortable asking for money, they don’t see the value in what they do, they worry about how the client will react, whether they will go ahead, they fear rejection, they feel needy… and so on.
The problem with this is that clients will often pick up on this and it invites problems. Wouldn’t it raise your suspicions if you could sense that someone was uncomfortable with the fee they are asking for their services?
Being comfortable with your fee means that when you communicate it, it is no different than if you were sharing any other piece of factual information, such as your name, e-mail address or phone number.
It is important to note that even if you are completely comfortable with your fee this does not mean to say the client will be! They may have expectations that are totally misaligned with the reality. However, if this is the case then the last thing you want is for their insecurity around money to cause you to get defensive because the only way from here is down.
Raising your fee
Only this week I asked someone why they did not charge a higher fee and she replied that other local practitioners are charging a certain amount and she wanted to be in line with this.
This is fine if you are happy to reduce what you do to a commodity and take on clients who are shopping around based on fees and charges. But, as you may have already discovered, clients who choose an adviser based primarily of fees often make poor clients because they have a transactional mentality.
In Alan Weiss’s book ‘Million dollar consulting’ he wrote: The secrets of receiving high fees are:
Base fees on the client’s perceived value of your assistance
Ask for them
Asking for more money for the same service is hardly an enticing proposition for a client, is it? So, the key to successfully raising your fees is to make a bigger difference. When you deeply invest in finding out what really matters to your client, help them live a better life, open up possibilities where before there were none, dissolve their fears and constantly exceed their expectations, then people are usually happy and willing to pay more.
Finally, be prepared to walk away from business that does not fit your criteria and clients that cause negative issues. Taking on or keeping business just for the money is soul destroying; it is sending yourself the message that you live in a world of lack and must grab every opportunity. You do not need any one person’s business and it will work wonders for you and your business to only take on clients who love you, love what you do and who do not quibble about fees.