Subscriptions to services like Morningstar were very expensive and limited to brokerage houses. They were actually delivered to our office in paper binders!
Now, since all or most investment information is available directly to consumers, it makes our role in researching and selecting investment products less valuable in a client’s mind.
Going back to the original question of how to demonstrate enough value to warrant a financial planning fee, the answer is actually quite simple: focus on the risk side of the balance sheet.
What do I mean by that? What I found, is in human nature the fear of loss is a much bigger driver than the opportunity for gain. That is especially true for women.
In fact, Allianz did a study on this topic in 2016 and cited 49% of women fear ending up broke and homeless.
Considering most clients come in as a couple, you would be wise to recognize her need for safety and security above all; not only for her, but for her children and grandchildren. She wants to know that when it comes to their overall financial situation, you’ve dotted every I and crossed every T.
She does not want a mishap or an oversight to upend her plans for a safe, comfortable and predictable retirement and, more often than not, will pay a significant sum for that reassurance.
With that in mind, I gained confidence charging significant financial planning fees when I started focusing on the non-investment areas in the lives of each of my clients. An example of this had to do with real estate.
If I saw on the balance sheet they had a lake house, I would ask about the titling of that property. If they told me it was titled in their personal names, I would point out the potential pitfalls with that titling.
For instance, what if a guest staying at the lake house was hurt or injured on the property? Not only could they be sued for the value of their lake house, but because it was titled in their personal names, they could potentially be sued for every other personally titled asset.
Typically, they had not thought through a situation like that, and didn’t know the legal ramifications to something as simple as the titling of a second home.
I might also ask how much umbrella liability insurance they carried and how it was structured. Was it enough, given their net worth?
In my practice, I actually created 22 different risk issues I could explore with my clients and prospects, effectively demonstrating that, while their portfolio of investments might be great, there were other areas in their financial life that left them vulnerable.