Time to change the conversation on fees, referrals

Time to change the conversation on fees, referrals
A couple of sample encounters show advisers how to stick firm to pricing and get the best prospect recommendations.
SEP 19, 2017
It's time to change the conversations we hold with ourselves, and the ones we have with clients. Your brain, specifically your limbic system, is hard-wired for survival rather than success. So when confronted with a challenging request, our brains go on the defensive and remove us from the conflict zone as quickly as possible. The problem is, we've limited ourselves, and our practices, in the process. For example, how often have you found yourself meeting with a prospect, explaining how you can help, and the prospect asks for a discount on the fees. The prospect is saying, "I want what you offer, I just don't value it the way that you do. Would you please still work with me?" (More Stephanie Bogan: How to ask for the fees you deserve) What if, instead of simply answering yes or no, you instead reframe the conversation and say: "That's a question we get from time to time. Over the years we've learned that our fees aren't the least or most expensive out there. We are committed to adding immense value to our clients. Doing this requires that we have the people and resources we need to deliver. Our fees are set based on professional norms, the cost of running a successful business and ensuring that we're rewarded fairly for the value we provide. Fees aren't something we compromise, just as we would never ask you to let us compromise the value we deliver. If our fees don't fit with your needs, we completely understand. That said, we'd love to work with you if you're ready to move forward." The same holds true for taking an inappropriate referral. Our brains tell us that if you say yes, you get a client and keep a referral source. If you say no, you'll lose both. But is that really true? Let's imagine that you call the local professional who referred the prospect and say: "Bob, I got a call from Jane Smith. I just want to say how touched I am by your confidence in making this referral. I always work to ensure your clients know you're really looking out for them by making sure all of their needs are met. I'll look forward to meeting with Jane and will keep you posted." Then you meet with Jane, only to discover that she doesn't meet your minimums. What do you do? Does your ADV say: we take all clients, regardless of size, needs or ability to pay fairly for the work we do? (More Limitless Adviser: Managing client expectations is a big part of an adviser's job) Instead, let's suppose you say: "Jane, I can see why John referred you to us. With your needs and goals, you can really benefit from financial advice. John has done you a great service. However, in this case, you don't really need the depth and breadth of the services we offer. My firm could help you, but honestly your needs don't justify our level of expertise and I would not feel good about charging you our fees. The best way I can help you is to refer you to another adviser who focuses on working with clients like you. If you'd like, I'd be happy to make an introduction to a qualified adviser who's right for you." Then, you call John and say something like: "John, I met with Jane, and you were right; she's a lovely person and really does have some needs. In meeting with her, I realized I've not done a good job of sharing with you who we do our best work with: business owners with complex situations who really need the expertise we've developed. We could work with Jane, but the fees we'd have to charge her wouldn't be fair and I just wouldn't feel right about it. I'm putting her in touch with a younger adviser who can better meet her needs, and I'll stay in touch to make sure she's well served. Of course, I'd love for you to keep sending me people to help. If they're a smaller client I'm happy to help them find an adviser that's a good fit, and if they have more complex needs we'd of course be happy to work with them directly. What's important to me is that you keep having this conversation with your clients, because I believe it's so important." (More Limitless Adviser: Cast off limitations with '5 Freedoms') What just happened? You've helped Jane in the way that's best for her without compromising what's best for you. You've demonstrated — to both John and Jane — that you're not one of those salespeople types, but rather a highly ethical and credible professional. Third, you've used this as a training opportunity with your referral source. Changing the conversation changes everything. Stephanie Bogan is the CEO of Educe Inc. and has spent 20 years helping advisers unleash their potential to build successful firms and lives they love.

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.