Transparency is the best policy when it comes to discussing fees with your clients, says April-Lynn Levitt, a coach with The Personal Coach in Calgary.
“We always like to see advisors have that discussion,” Levitt says, “as part of their process when they are first meeting and engaging with clients.”
It is helpful to explain the various fee structures. For example, you may be running a largely transaction-based practice, while many other financial advisors are migrating toward a fee-based model.
Whichever model you follow, Levitt says, it is your responsibility to give your clients a proper overview of how your fees are charged.
One way to help you start this conversation on a positive note is to explain the services your clients are receiving for the fees they pay.
“It helps the client better understand what you do for them,” Levitt says, “if you focus more on the value and less on the fees.”
Another way to ensure that your client is not left feeling negatively about your fees is to craft a document – together with your client – that lays out exactly what you will be charging and what the client will get in return. Preparing this kind of “commitment letter” will help you to formalize the relationship and address any uncertainties your client might have.
“Transparency is the key to boosting your levels of client satisfaction,” says Alan Middleton, executive director with the Schulich Executive Education Centre at York University in Toronto. “Be honest and clear about what you charge. Lots of advisors won’t, so it is a way to stand out from the rest. “
Taking a value-driven approach, Middleton adds, will help you to build a greater sense of loyalty with your clients.
“Help clients look at the fees you charge as a way to help them achieve what they want: income growth, family security or time convenience,” he says. “When phrased that way – instead of as just a number on the bottom line – it helps them understand why your services are valuable.”
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