A simple process for going fee based

For financial advisors who are planning to switch their clients to a fee based platform or process, here is one strategy that will help you build a process for getting there faster. Build two practices. One practice called the new business practice, which has clients that are fee based and already are fully aware of your process, understand your value and are an ideal win-win client ( they are happy with your revenue and services and they are happy to pay the fees for your services which are fully transparent). If you have no clients under this new business, then create the new business process and your value proposition. Once you create it, you can test it on clients and build your process of moving clients from your old business model to the new business. List the clients you want to move into the new business and make a plan of how long it will take to get them to “buy in” to your new business. This may include a discussion, paperwork and additional planning and document gathering. Now make a list of all clients in your old business, and go through which ones may fit your new business practice and which ones will stay as part of your old business practice.


Deliverables on the new business
Make a list of deliverables for the new business including well defined planning checklists in the five key areas including : financial planning or retirement planning, tax planning, risk management and insurance planning, estate planning and investment management. Now that you have a list of deliverables, find the tangible and intangible value of each deliverable. This forms the basis of the new business process. More value delivered to your client. After you have quantified the value of all of your services, quantify what someone would be willing to pay for all of these services compared to the benefits and costs. Focus your value proposition on your new practice.
Deliverables on the old business
Now add up how much your deliverables are worth on the old business. You will find that some advice and planning you gave away for free. The bottom line is that you must have confidence that the work you do is valuable in order to expect other people to value you and your work. It’s business. Value is measured by money. Stop leaving this money on the table and under-serving your clients. It is not a percentage of assets, it is a dollar amount. How much is your advice worth? List the clients under the old business that will stay under the old business model.
By the end of this year, how many clients do you want on the new practice and how many clients will stay on the old practice? What are the metrics for the new practice versus old practice in 12 months? We know the research by Pricemetrix suggests a potential lift in revenue over time ( Source: Pricemetrix Insights, Transitioning to fee, Volume 6, August 2012 )
Make two client lists, new practice, old practice.
Now you have two business models, old practice and new practice. You may choose to run on two models for a period of time but eventually you will hit capacity issues and will be faced with the challenge of how many clients can I manage old practice and new practice. Start by writing out the lists and segmenting your clients based on annual recurring revenue and services provided. It will become clearer just by doing this simple exercise on how many new practice versus old practice clients there will be for you in the next year.