Time to re-price old clients

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

Sep 12, 2013 @ 2:47 pm

By Liz Skinner

practice management, fees
+ Zoom

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.”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

AXA's Christine Nigro: How to handle being the only woman in the room

Women face unique challenges as they move into the C-suite, and they need to remember to always be themselves and let their professional strengths shine, according to Christine Nigro, vice chairman at AXA Advisors.

Video Spotlight

Will It Last As Long As Your Clients Do?

Sponsored by Prudential

Video Spotlight

The Catalyst

Sponsored by Pershing

Latest news & opinion

Brian Block's $4 million bonus was tied to a key metric at ARCP

Prosecution rests case in fraud trial against CFO of American Realty Capital Properties.

Edward Jones is winning the Google search war

Brokerage firm's digital marketing investment helps land it at the top of local and overall search engine results, report finds.

Voya's win in 401(k) fee suit involving Financial Engines bodes well for other record keepers

Fidelity, Aon Hewitt and Xerox HR Solutions are currently defending against similar fiduciary-breach claims.

Collective investment trusts getting more attention from 401(k) advisers

The funds are catching on due largely to lower costs and more product availability, but come with some inherent drawbacks.

Vanguard rides robo-advice wave to $65B in assets

Personal Advisor Services, four times the size of its closest competitor, combines digital and human touch.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print