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Financial Advisors, Don't Be Afraid of the Fee Conversation

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Are you uncomfortable when the question of fees comes up in a new prospect meeting? You’re not alone. While it may seem awkward or insignificant, the fee conversation is an important one to have.

With a bit of preparation, you can use the fee conversation to promote business growth, increasing prospect-to-client conversion, reducing client attrition, and turning clients into advocates who actively bring referrals into your practice.

How the Fee Conversation Can Promote Business Growth

Whether you’re fee-based or commission-based, it’s important for your prospects and clients to understand your service, value, and how you’re paid. This reduces surprises when statements arrive – an important goal considering, high fees are the top reason clients give for switching financial advisors. It also helps to build trust, reinforce your value, gain buy-in, get feedback, and increase advocacy for your business.

Here are five ways a productive fee conversation can promote business growth.

1. Build Trust Through Transparency

As a financial advisor, you’re in the business of trust. Being up front about your fee structure goes a long way to build client confidence.

If your fees are higher than other financial professionals in the area, tell your prospects. This is your opportunity to show why you provide greater value. It’s a natural segue into your value proposition pitch.

2. Establish Your Value Proposition

Approach the fee conversation as a value proposition pitch. Whether you’re talking with a prospect or a long-time client, it’s always important to reinforce the value that you provide. This is your opportunity to explain the depth and breadth of your service so they remember why they sought you out.

3. Gain Buy-In From Your Prospects and Clients

How great would it be if you could start every client relationship with a clear understanding of what will and won’t be involved? Having a fully transparent conversation is a great start in that direction.

Prospects should come away from the conversation knowing the service you offer, why you offer it, and how you’re able to offer it. This allows them to make an informed decision.

Sometimes this may lead to the realization that your service isn’t right for them. And that’s a good thing – it saves you both from wasted time and allows you to part ways with no hard feelings.

4. Create a Productive Feedback Loop

A conversation is a two-way communication. Instead of approaching this interaction as a lecture, bring your prospect or client into the conversation. You can also ask existing clients what they’ve found the most valuable about your service.

This provides instant feedback on what resonates with prospects and clients regarding your value proposition, helps you identify where to focus the rest of the conversation, and allows you to find potential service gaps.

5. Convert Clients Into Advocates

Here is an interesting benefit that can come out of a strategically planned fee conversation – it can result in an influx of new client referrals. Reinforcing the value of your service and your dedication to transparency will build the trust that’s needed for individuals to recommend your practice to their inner circle.

The conversation also provides you the opportunity to ask your clients if they have a close friend or family member who could benefit from a similar relationship to help them grow and preserve their wealth.

Your Approach Matters

The success of your fee conversation hinges upon your approach. Here are some strategies to help you enter your next fee conversation confidently.

1. Publish Your Fees

Whether it’s on your website, electronic marketing materials, or printed brochures, publishing your fee structure creates full transparency leading into a prospective client meeting. This helps eliminate prospects who don’t fit into your business model and reduces confusion and surprise.

“Full transparency makes the financial advisory fee conversation a nonevent. My fees are on my website, so potential clients know exactly what they will pay even before we speak.”

John Stoj, Founder of Verbatim Financial

2. Frame the Conversation From Your Client’s Perspective

Your clients likely come from a variety of industries and experiences. Their income structure may be vastly different than yours.

Eric Greth, a financial advisor at Cetera Investors, recommends breaking down the conversation to align with your client’s experiences by first discussing how your client is compensated, what they are compensated for, and if they ever incur expenses outside what their employer covers. He then explains his process and the education that’s needed to give financial advice, guidance, planning, implementation, and ongoing review.

“We discuss the importance of what they do and what’s involved. Then, I explain how what I do for them isn’t much different. I don’t get pushback when it’s framed in this way.”

Eric Greth, Financial Advisor at Cetera Investors

3. Keep It Simple

Simple is always best. That’s especially true when it comes to crafting your fee explanation and value proposition. Keep your words brief and avoid stretching out the conversation. This will show confidence and eliminate potential confusion.

“Always simplify! You should be able to sum up how you’re paid in just a few sentences. Keeping your service offering focused and easy to understand leads to happier clients.”

Nick Bormann, CFP®, Investment Advisor at Bormann Wealth Management

Bringing It All Together

When you’re nervous, it’s easy to get off track mid-conversation. Practice your fee conversation and value proposition often to nail the discussion.

If you find you’re having difficulty articulating your value proposition or explaining how you differ from your cross-town competitor, then it may be time to expand your service offering. Axos Advisor is here to help with banking products that combine innovative technology and relationship-based service to position you as a holistic advisor. Email [email protected] or call 877-887-3030 to learn how we can complement your current service offering.

Financial Advisors, Don't Be Afraid of the Fee Conversation

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