If you are worried about how industry and regulatory change will affect your practice, you are already behind the curve. Going forward in a transparent world, how will you charge for your fees? Notice I did not say fee based. I don’t mean hourly fees either. Fee ready for the future means a combination of fee based and fee for advice. How do you get your practice fee ready when you sell commission based insurance products, investment management and planning such as retirement planning, financial planning, estate planning and more. Advisors have an opportunity to shift from products to advice.
I had a great discussion last week about fee readiness with Bill Bachrach (www.billbachrach.com) who has an incredibly successful process to prepare advisors to be fee ready. He asked me an interesting question. When the market is down dramatically, do clients need the advice of their advisor? When the advisors income is down dramatically also, does it make sense to work harder when your income is down dramatically? Is this a win-win scenario? Pricing your services based on that information will help you become fee ready for the future. While I talk to advisors about process in their practice, Bill teaches advisors to sell the outcome to clients, not the process. The outcome is what people are willing to pay for. How you illustrate the outcome depends on the client. In your practice are you looking for more ideal clients, more revenue and more lifestyle? What is the outcome you are looking for in your business for you? Once you have a clear vision of what outcome you want, what are you willing to pay for help or advice to get it? Now walk in your clients shoes. What outcome do they want in their business and life? What are they willing to pay for advice to get it?
What does fee ready mean? For some it may mean going fee based. For others it is fee for service. A third subset of advisors may be doing both, fee for service and fee based. Regardless of how your business model is set up, what fee readiness means is to show your ideal clients the fees they pay for advice and service and create a win-win environment where your clients and you both agree to the total costs in dollar terms ( example $10,000 per year fees ) . While insurance business is different in that insurance policies always discuss the cost of annual premiums ( in dollar terms) the commissions are not transparent. On the other hand, the money management and holistic financial planning services and advice can be transparent. In the end it is important to build a win-win client relationship when it comes to fee readiness.
Looking around the world, the 5 most highly regulated countries from a financial advisors perspectives are Australia, United Kingdom, South Africa, United States and Canada. How do financial advisors in these countries do to tackle major regulatory changes? Researching practice management from around the world, we found that while some of the concepts around the world are similar, the implementation details and delivery to clients made the difference between average advisor and top performing advisor. (www.businesshealth.com.au, Key Business value Drivers 2013, Business Health Pty Ltd. which has been doing practice management from around the world for over 12 years) The major regulatory change is not something that advisors can prepare for in a few hours. Depending on your business, there are several details to consider. If you are getting your business fee ready. I would start by building project 100.
Have a 1 to 2 year timeframe – Project 100 (you need 100 hours to be properly prepared for fee readiness if you are not doing it now, depending on the number of clients you have. It will take time, as you may need to have new discussions with all of your clients It is called project 100 because you will need to spend 2-4 hours per week for one year 100+ hours on building processes ( if you do not already have them) The first step is to plan them in your calendar each week 2-4 hours working on your business. Think how long it takes to write a letter to your clients. Plan the time first.
It starts with client feedback. Are your top clients willing to pay your fees differently? What are your top clients willing to pay you? Now meet with a new prospect and present your fees. Are they willing to sign up and pay your fees? What do top advisors provide and charge? The toughest part of the journey towards fee ready is finding out some of your top clients are not a win-win relationship. They are not willing to pay your fees for the services you provide. An emotional barrier to getting fee ready. Once you cross this barrier, you are on the road and can look back at the rest of the industry and notice you are ahead of the curve.
To learn more about getting fee ready join Bill Bachrach’s webinar to learn about : A Fixed-Fee for Advice Business: How Transparency is Changing Our Industry and What To Do To Stay Ahead of The Curve
Posted on 06/22/2015 at 12:00 AM