01 – Practical pricing for practical practices
This edition of ’50 Up’ is all about pricing.
In particular, we want to help advisers understand the key elements of setting and maintaining a pricing system. In many ways, financial advisers have only had to turn their minds to pricing in the last three or four years. Prior to this, the presence of commissions meant that the pricing decision was often set by the financial institution. But commissions are gone on investment and superannuation products and they are going on risk insurance products. Advisers these days need to establish and run their own pricing system.
And when it comes to pricing, it is definitely not a case of one size fits all. Every practice has to decide how best to fix its pricing system.
The following pages discuss various things that you need to keep in mind. But we want to emphasise one thing in particular: it is always important to be practical. The most important element of any fee structure is whether clients will use it. If they won’t – if your pricing system turns clients off – then it is not practical. Your pricing has to work.
This is, of course, exactly the same as the fact that your advice has to work: it too needs to be practical. That is what we mean by a practical practice.
So, keep these two things in mind: your pricing needs to be as practical as your practice. We hope you enjoy this edition of 50 Up!