30 – Communicating change to your clients
If you are adapting a fee for service model, or if you are including fee for service for the first time, you will need to communicate that change to your clients. A simple letter to each client is often the best way to go.
Mark Twain is reputed to have said that “when you tell the truth you do not have to remember anything.” With all communications to all people, it pays to be honest. This is especially the case with your clients.
If you are adopting a fee model for the first time, having used commissions in the past, then explain the reasons why. Tell your clients that it is actually government policy to reduce the extent to which clients can have their advice paid for via commissions.
Talk about the advantages – to your client – of the model that you are choosing. Each model has such advantages.
Pre-empt any complaints or dissatisfaction your clients may express. Again, if this is the first time that clients have been asked to pay fees, you can expect some resistance. Acknowledge this, and be ready with the benefits. Bear in mind, if your client is paying more under the new pricing system then there is no way of avoiding some resistance on client’s behalf. The only way to proceed is to agree with your client that they will need to pay more. You need then to go about demonstrating why it is still worth their while to pay you a fee.
If you are moving between pricing options, again be honest about the reason for the move. In particular, if you are moving away from time based fees, talk about the tension that these fees create in terms of efficiency.
One common way to move away from time-based fees is to cap the fee in the first year following the move at no more than 100% (or perhaps 105%) of the fee paid in the previous year. If clients are assured that they will not be charged more for the same service, this will make the change much more agreeable to them. Price rises can then be rolled out slowly in coming years, once the new arrangements have become more familiar.
Invite your clients to call you if they want to discuss the new pricing arrangements. Take the time to explain. And then explain again.
But don’t apologise. You don’t need to be sorry that you are seeking to make a living.
And one last thing: if clients simply refuse to move to the new model, be ready to ask them to move to a new adviser.