This article explores why it is important that client’s see the fees they pay you as an investment in themselves and their life.
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 kept wanting to renegotiate 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 the adviser had already accommodated a request for a reduction in fees. But the client still wanted more.
A reduction in fees was not appropriate because of the volume of work being done for the client.
What role does a financial planner 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 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.
3. If the adviser accommodates the client’s request then the danger is that the relationship becomes one where the adviser is subservient to the client.
In response to the client’s request 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.
Who sets the terms of the relationship?
From my own experience, almost all 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 the one setting the terms of the relationship and not capitulating to a clients’ unreasonable requests. (To read ‘Are clients willing to pay for financial planning?’ Click here).
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 he 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.”
Why it is important that client’s see the value
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 a client that treats 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?”
Are you willing to 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.
