This article explores why your financial planning fees must never be an issue with clients.
Just recently a financial planner client of mine wanted to talk about a fee situation with a client of his.
The financial planner and client had worked together for several years. However, the client wanted to keep negotiating down the financial planning fees. He was being encouraged to do so by a friend who was doing the same thing with his adviser.
This client had originally been a referral from another client. So, as a concession he had already accommodated a request for a reduction in fees. But the client still wanted more.
A reduction in fees was not appropriate because a lot of work had been done for the client.
What role do you want to play in a client’s life?
My client and I spent some time talking about the situation and I had his permission to give my honest observations. These were:
1. The client sees the service as a commodity and, therefore, wants the lowest price.
2. The client wants to set the terms of the relationship. He seems unwilling to accept the published and standard financial planning fees (that all other clients are paying).
3. If accepting of the clients request then the danger is that the relationship becomes one where the adviser is subservient to the client.
My client asked me to look at an email he had composed to send to the client.
It was extremely long and was attempting to justify his position. It was not giving in to the clients request but it did come across as people pleasing.
The insecure state of mind
From my own experience, any problems I have had in the past with clients and fees have been rooted in my own insecurity.
If I entertain thoughts about losing money, losing a client, or how a client might react if I do not accommodate them, it clouds my better judgement. For instance, I might choose to tolerate behaviour from a client that I do not like. This is then likely to create resentment.
It never serves a client or an adviser to allow a client to set the terms. A professional person should be providing strong leadership for clients, not capitulating to their unreasonable requests.
A new response to the client
Following our conversation my client realised he could respond differently.
His revised email to his client was much shorter and was articulate, respectful, and kind. Yet it firmly stated his position and terminated the relationship with the client.
Following this he said to me:
“I feel a whole lot better for sticking to my values and staying true to myself.”
Your financial planning fees – why they must NEVER be an issue
If a client cannot see the value in what you are doing for them and wants to barter over the financial planning fees, then it is a warning sign.
Are you going to do your best work with clients that treat your service as a commodity?
Ultimately, only you can decide how you respond to a request to reduce your fees. But the question I asked my client was:
“What kind of clients do you want to build your practice upon?”
Only work with great clients
Over 20 years ago I read a book called ‘Values Based Selling’ (now Values Based Financial Planning) by Bill Bachrach. He sums it up perfectly:
“There is power in walking away from difficult people. By saying “This won’t work out.” you increase your feelings of self-worth. You affirm, “Hey I don’t need this client.” After the feelings of discomfort pass, you’ll find elation on the other side. You don’t need to tolerate difficult people to be successful. In fact, if you are dealing with a lot of difficult people, you are hindering your own success.”
P.S. You can download my brand-new report, ‘Magical Client Meetings Everytime!‘ by clicking here.
