Why do many individuals work with an accountant to prepare their tax return instead of doing it themselves? One reason is the accountant, using their knowledge, advises the client how to pay the minimum the government requires instead of taking the DIY (do-it-yourself) route and simply paying what the government requests. The fees the accountant charges are justified by the client’s tax savings. A similar logic can apply when advisors assist their clients with financial planning.
Ten Ways Clients Can Reduce Fees In Their Everyday Lives
You charge clients fees based on assets under management. Clients might wonder “what they get” for the money spent. In addition to investment returns, which can be low or even negative in some years, there is also value in money they have saved, thanks to your advice.
1. Switch from paying by mail to autopay. Your client gets hit by late fees if their payment arrives after the grace period ends or the due date has passed. Although surface mail seems to have slowed down, the firm wanting your payment does not take that into account. Some firms charge a small monthly fee if you elect to pay by mail instead of automatic debits to your checking account. Your client’s personal insurance bills and utility bills likely fit into this category.
2. What are they paying in credit card interest? According to WalletHub, as of about 4/14/22, the average rate for existing credit card accounts is 14.56%. What is your client paying? Does your firm offer credit cards? At what rate? Do other lenders have attractive introductory rates for balance transfers? What fees are involved for leaving your current lender? Your client might be able to reduce this expense.
3. When was the last time they shopped their personal insurance coverage? Your client might be great at finding the cheapest gas prices, but probably hasn’t looked at their homeowner’s insurance policy since they bought their house. Their insurance agent could probably be helpful at finding alternatives with higher deductibles and lower premiums. If not, perhaps you could refer some agents you know and consider good.
4. What are they paying on their wireless plan? These prices can be steep. They can also get competitive if you shop around, then call them up and tell them you are considering leaving. This can be a significant monthly bill, especially if you are paying for unlimited data access you might not need. It is at least worth the effort to check it out.
5. Is their mortgage rate competitive? It is highly likely their rate is competitive since rates have been low for a long time. It is worth asking, so your client is at least aware of what they are paying. Does your firm offer home mortgages? What are their current rates?
6. Do they have variable rate debt? This could be a ticking time bomb for your clients. Most people think the Federal Reserve will be raising rates this year. The question is how many times. If your client is used to paying a very low rate on a very large balance, they will be in for a big shock. Can their variable rate home equity line of credit (HELOC) be converted into a fixed rate loan? Can you make this happen at your firm?
7. Where are they buying their groceries? Free enterprise is good for many reasons. One reason is there are often new entrants to the market seeking to gain market share. Does your client shop at a prestige supermarket because all their friends do the same? Maybe it is time for them to broaden their horizons. Big box stores can be competitive. Aldi and Lidl, two German discount grocery chains are expanding their U.S. presence.
8. What are they paying in annual fees to carry certain credit cards? Some cards come with airline lounge access, concierge services and other perks. For example, the Amex Platinum card runs about $695 in annual fees. Is there an additional fee for a companion card? Are the card benefits worth the cost to the client? Does the card provider offer less expensive alternatives?