Time to re-price old clients

Advisers should value their services and not fear charging what they're worth, expert says

By Liz Skinner

Sep 12, 2013 @ 2:47 pm (Updated 3:20 pm) EST

practice management, fees

Changing what advisers charge existing clients may be the best way to boost firm profitability, a consultant told advisers at the Financial Services Institute Advisor Summit in Washington yesterday.

Some experienced advisers have increased fees for new clients in recent years after considering all the services they provide, including tasks like restructuring flawed estate plans, helping plan for the care of elderly parents and negotiating mortgages, said Giles Kavanagh, managing director of Pusateri Consulting and Training.

However, a lot of advisers are hesitant and “uncomfortable” about changing the prices they charge their longstanding clients, he said. And that pricing discrepancy is leaving money on the table.

"Re-pricing current clients is the best way to improve your profitability in a justified way," Mr. Kavanagh said.

Advisers should be upfront and tell existing clients they are “correcting” their prices to a fair level after analyzing benchmarking studies, he said. Offer customers a few months to consider the increases and tell them, “We hope you'll come along.”

Mention something about the future, too, he said, suggesting: “Looking forward at your situation and the markets, we believe that our value to you going forward will be even greater.”

Many advisers worry clients don't really appreciate the varied levels of service they offer and fear charging higher prices will reduce asset retention. However, industry surveys suggest otherwise, Mr. Kavanagh said.

“Clients value trust and performance more than price within the overall advisory experience,” he said.

Mr. Kavanagh praised one adviser who addresses the issue of price increases directly with people even before they are clients. She says: “This is my price and it will go up over time.”