Having “the talk” with your clients

As most clients have experienced lower investment returns over the past five years, it is becoming more challenging for advisors to demonstrate their value to clients. This value can come in many forms, however, and most relate specifically to your skills as a financial advisor.

Levitt offers some tips on how you can make your “fee talk” run more smoothly:

> Mention your strengths
One effective method is to frame your “fee talk” in your strengths as an effective wealth manager.

Levitt suggests you focus on how you have helped your clients toward their own goals, rather than about what direction the markets are moving.

If you’ve done your job properly, you have helped your clients set their financial goals and helped keep them on track for the long-term, despite the recent market volatility. You might also have helped your clients save money on their taxes, advised them on insurance coverage and helped them develop new strategies to maximize their market returns.

“It is really tough to justify your value if you aren’t doing those things,” Levitt says. “If you are going above and beyond, you are adding value [for the fees you charge] in other ways.”

> Keep your message upfront
If you haven’t talked to your client about fees in some time, you should broach the topic.

As with everything else, the key is to repeat your message. It’s more likely to be understood by your clients if you remind them occasionally.

One way to know when to have this conversation with your client is to insert a note into his or her file on your contact management system. This will help you keep an accurate listing of when you’ve talked about your fees.

“If you haven’t been open about fees,” Levitt says, “it can come back to haunt you.”

> Value for money
It is possible your client might approach you wondering why your fees are higher — or lower — than those of a firm that offers comparable products.

The best way to approach this question is to discuss with your clients the services you offer that are available to them as a result of these fees. Often, clients might not be aware or remember that services such as estate planning are available to them.

Be sure to have a handout available that details all the services covered by your fees.

> Keep it simple
Advisors often have too many different fee schedules, Levitt says. Having 10 options, she says, hampers your transparency. Instead, she says, keep it simple, with three options at the most.

Says Levitt: “That really helps with the whole conversation.”

Giving your clients a clear choice about which service level they want and how much you will charge them helps you build trust with your clients.