I called them potential “trainwrecks”—situations or things that could come along and ruin their chance for the comfortable retirement they were working so hard to achieve.
In my process, (which is what I teach my advisor students), I systematically went through a list of potential areas of risk that, if unchecked could leave them vulnerable.
Typically, after I had identified three or four risks that could come along and ruin their day, it was not uncommon to get a visceral reaction. Many times, they would say things such as “Why didn’t my real estate agent advise us on this?” or “How come my attorney never mentioned this to us?”
My response was always the same: “I don’t know, but not to worry; we can get that fixed.”
Keep in mind, I didn’t tell them how to fix the problems I identified. They were going to have to hire me to do that.
Depending upon the net worth of the client and/or the complexity of their situation, when I was done pointing out their vulnerabilities, it was very easy to confidently quote them my financial planning fee.
After all, I was going to help them fix the problems we had just uncovered together—problems other professionals had overlooked.
I created value, not by talking about their investments, but by identifying issues that could come along and disrupt their chance for a wonderful, comfortable retirement (or whatever goal they were pursuing).
I also learned the financial planning fee I charged had to be relative to their net worth. For instance, it would be a mistake to charge a prospect worth $10 million a $2,500 planning fee when they would easily expect to pay in excess of $10,000 per year or more.
In the end, clients of every size appreciate an advisor who will not only manage their money, but more importantly, will identify potential pitfalls that could come along and disrupt their future plans.
Once you master this skill, you can easily charge significant financial planning fees with clarity and confidence.
Erin Botsford, CFP, The Advisor Authority, is the creator of the Elite Advisor Success System. Botsford was a 31-year veteran of the industry and a Barron’s Top 100 Advisor in all categories. Learn more about her and her training at ErinBotsford.com.