When it comes to meeting with clients, there are three primary topics financial advisors should be confident about and well prepared to discuss. These include the value of your services, what differentiates you and your team, and how your fees are structured.

Many clients may be unfamiliar with how financial advisors are compensated. Being up-front about your fee structure is critical to building trust. Keep in mind, value and cost go together. Clients will often complain about fees if they are ambiguous about your value. Clients who understand your value but are unclear on your costs will also be likely to inquire further. Here are a few tips on how to best communicate value and fees:

1. Know Your Value

If you do not know your value, how can you expect anyone else to? Your value is a combination of your knowledge, experience, and services. There are so many services financial advisors provide that they are often forgotten. Each service you and your team provide takes time and translates to a cost. Take the time to list all your services. Here is what a sample list may look like:

• Risk Tolerance Analysis
• Existing Portfolio Evaluation
• Financial Planning
• Investment Due Diligence
• Insurance Analysis
• Social Security Strategies
• Retirement Planning
• Charitable Giving
• Estate Planning
• Multi-Generational Planning
• Investment Management

Each of the above services is associated with a cost. The total of those costs is a large portion of your fees whether they be asset under management fees, hourly fees, annual fees, or a combination of.

2. Communicate the Differentiators

Your services alone are not what differentiates your practice. What differentiates your practice is your commitment to the financial well-being of your clients. Create a list of all the ways your practice goes above and beyond. Remember, there are costs associated with these differentiators too. Here’s a sample list:

• Advanced Technology
• Investment Research
• Fiduciary Standards
• Professional Network
• Behavioral Finance Education
• Annual Events
• Experienced and Accessible Team

3. Fee Transparency

There are many ways in which advisors receive compensation. Educating your clients about the various forms of compensation is the first step in introducing your fee structure. Here are the forms of compensation you’ll want to discuss…whether you use them or not.

• Asset Under Management Fees as a Percentage
• Asset Under Management Fees as a Fixed Amount or a Flat Fee
• Hourly Fees
• Annual Fees
• Combination of Fees

AdvisoryHQ breaks these down clearly and provides a look at the averages charged for each in their study, Average Financial Advisor Fees in 2018-2019 | Fees Charged By Advisory & Wealth Management Firms.

After providing an overview of how advisors are generally compensated, you can then present your fee structure. You may consider putting your fee structure should be in a table format with account value ranges on one side and annual fees on the other.

If you want fewer questions about fees, it is important that you know your value, differentiate your practice, and practice fee transparency. If you’ve done an excellent job communicating all three and the client continues to ask about fees, they may not a good fit for your practice.

Of course, tangible marketing materials are important in this process. Our business development consultants and virtual marketing services can help you create concise materials that are specific to you practice for use with your client conversations.