Is it human nature to want to get as much as possible while paying as little as you can? There is a great line in the film Crazy Rich Asians. It goes something like: “No one loves free stuff as much as the rich.” Yet some prospects think advice should be free, trades should be free. Everything should be free. How do you make the case for paying for advice?

17 Free Products And Services That Are Not Really ‘Free’
Your prospect might contend trades and advice should be free, but they are smart enough to know many supposedly free things have strings attached.

1. The disappearing surrender charge. You’ve seen this one before. Mutual funds used to work this way. It was often associated with B class shares. “You don’t pay anything when you buy. 100% of your money is put to work for you.” They would go on to explain if you buy today and sell tomorrow (and the price didn’t change) you would pay 4% as a surrender charge. “But if you hold it four years and one day, then you pay nothing.”
Reality: There is a 4% sales charge, administrative and management charges built in. These are amortized over time. It is not free of charge, regardless if you held it one year, four years or 10 years.

2. Spend over $50 and get a free gift. You would see this offer at the perfume counters at department stores. If you spent a specified amount on the full-priced items, you got something extra.
Reality: The cost of the “extra” items is built into the ticket on the fully priced items.

3. Buy a suit get free alterations. Once upon a time it was standard practice for men to buy a suit and the pant bottoms would be unfinished. Clothing stores often had a tailor onsite. You buy the suit. They stand you in front of a mirror and put pins everywhere. A week later you return, try on your suit and take it home.
Reality: Tailoring is built into the suit price. How can you prove it? Bring a suit you bought elsewhere and ask them to tailor it for free.

4. Buy one, get one free. This is the BOGO offer. It’s often used in restaurants to “get butts in seats.” Often it applies to one course, typically the entrée. They realize people will buy drinks and dessert, which are full price.
Reality: Buy one, get one free means the entrees are being discounted to half price. The second entrée is not free. How can you tell? Try sitting down and saying you intend to only order the second entrée, which you expect at no cost. It isn’t going to happen.

5. No load mutual funds. These are free, a great deal compared to front-end load funds sold by those…brokers. The mutual fund company is not being run by unpaid monks providing a free service.
Reality: No load simply means one less person is getting paid: the person who would have been selling the fund to the investor. The managers and administrative staff are still getting paid. How can you tell? Look at the firm’s big buildings? How are they paying for them?

6. Free shipping. Almost everyone offers free shipping when you place an order online. Extra costs can be annoying.
Reality: The postage or delivery service still needs to be paid. The cost of shipping is built into the item’s price.

7. Get an extra one free. Just pay shipping and handling. You might be familiar with the “as seen on TV” products advertised on cable channels. “But wait…we will double the offer…just pay shipping and handling.”
Reality: The shipping and handling charges are often in tiny onscreen print that disappears quickly. The company is making something on the second item.

8. Free estimate for replacing your windows or roof.  People’s homes need regular maintenance. You see lots of ads on TV for roofing and replacement window services. They offer a “free inspection” or “free estimates.”
Reality: This is a system for generating prospects. Once they uncover a problem, it doesn’t go away unless you take steps at address it.

9. Free lunch. You’ve heard the expression “There is no free lunch.” It was associated with bars and taverns.
Reality: There might be a self-service lunch buffet set up, but you are expected to buy drinks while you are eating.

10. Free toaster when you open a CD account. People joked about it during the 1970s. When you opened an account at the bank, depositing a certain amount, they gave you a free toaster as a “gift.”
Reality: Is the rate they are paying the best rate you can get on a six-month CD when considering the competition? If not, the difference in interest paid is the price of the toaster.

11. Free access to newspaper articles. Many papers have successfully adopted this strategy. Access is free, but you are limited to perhaps viewing three articles per month.
Reality: After you reach your allowed limit, you hit the paywall. You can subscribe to view more articles or you can wait until next month when the counter resets.

12. Streaming service subscriptions. First month free. You see this with streaming services. It’s $4.99/month, but you get your first month free as a “trial” subscription.
Reality: The first month is free, but you must actively opt out in order to unsubscribe and avoid future charges. Unsubscribing is often difficult.

13. Buy the hot dog, get the buns free. Supermarkets sometimes run these promotions around the summer holidays. Buy a certain brand of hot dogs, get the buns and maybe even mustard free.
Reality: It makes sense because if you are serving hot dogs, you need the buns. The hot dog brand offering this deal might be more expensive than competing brands.

14. Free cruise or free hotel stay. Timeshares used to offer a free hotel stay as an incentive. You would get a short (two-night?) stay at a resort with the understanding you will attend their two-hour sales presentation.
Reality: It isn’t free because you are paying by giving up two hours of your time. They are paying to get prospects.

15. Free admission. You might come across this when clubbing. Admission might be free of charge. There is entertainment. When you sit down, there is a two-drink minimum.
Reality: Consider the total cost of the experience. You paid at least the cost of two drinks plus tax and tip.

16. Commission-free trading. Many firms offer the ability to do trades without paying fees. This is quite difficult for financial advisors when prospects say: “Why should I pay you when I can trade for free?”
Reality: The execution price is the issue. You remember learning about odd lots when you were in training. The price the client got is different than if they sold round lots.

17. Free advice, free tools online. Some services advisors provide can be provided in a similar fashion using online tools. Investors are used to thinking of advice as having no cost or being “free.”
Reality: Free advice is biased advice. It’s often there to make the case for buying the one product on offer. Many advisors act in a fiduciary capacity, representing the best interests of the client. This kind of advice costs money.

Many things advertised as “free” have hidden costs. Investors understand it’s reality. If you discuss how other products and services aren’t “free,” they may begin to understand objective investment advice and free trades are not really “free.”

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book Captivating the Wealthy Investor is available on Amazon.