Demonstrate value before you demand your price

Pricing is a perennial problem and there is no perfect approach. What works for one client may not work for another. What works for one adviser may not work for another. Beware the gurus: you cannot coach if you have not played and I seriously question how many times they have sat down with a real client with a real budget and negotiated a price for financial planning advice.

One thought: if you are in growth mode concentrate on your long-term revenue and your long term client relationships. Get the client on board. Make sure she is happy. Whatever it takes. Then show the client how good you are and how much value you can create for them. Increase your fees slowly later, bit by bit, making sure your client has the capacity and the willingness to play.

If your practice is more mature, and there are no more hours in your day, think about using price as a filter. The clients who do not value your services will self-select, and leave. You will be left with a happier and more appreciative group of clients, which makes your life happier too.

Or think about stratifying your clients and charging higher prices to the higher strata who get the higher level of service. By the way, some clients will not need the higher level of service, and will be better placed on the lower, cheaper, strata.

I confess to being impressed by facilities that allow advisers to take your fee from the client’s investment, including their super. This will be in many client’s best interests, as it will leave their day-to-day cash flow available for their day-to-day needs. This is a nice overlay between what is in the client’s best interests and what is in your best interests. They are not mutually exclusive concepts. However your SOA must show you have explored and explained what will happen to the client’s long term retirement prospects as a consequence, and possibly suggest alternative solutions.

The Dover Group