An interesting phenomenon exists, at least in our country, that consumers tend to associate value with price. The more they pay, the more value they associate with it.
For example, many will pay more for designer handbags, luxury cars and expensive jewelry, and when faced with important decisions, like finding a heart surgeon or an attorney, most look for “the best.”
The same is true in our profession. As clients seek out professional advice from a financial advisor, every client wants to think they are getting the BEST advice money can buy.
After all, the decisions they make with their money will have significant and long-lasting implications for them and their family
Given that most clients expect to pay for advice and services in other areas of their lives, how can advisors translate that expectation into their business and feel more confident in charging financial planning fees?
To answer this question, I’ll refer to the old adage: “In the absence of value, price becomes an issue.”
In applying that to our profession, the question for advisors becomes: How can I demonstrate enough value to warrant charging a financial planning fee?
The answer may surprise you.
In my 31-year career as a financial advisor, I learned that focusing on investments, manager selection process and/or historical investment performance will likely not be enough to demonstrate value.
Simply put, in a prospect’s mind, money management is a commodity. To secure this commodity, they have many choices. They can hire an advisor, go to a low-cost provider, or they can do it themselves.
And, let’s face it: all or most of the information about investments and market performance is readily accessible to any consumer who wants to find it.
It wasn’t always that way. Once upon a time, especially before the proliferation of the internet, WE—the advisors—were the keepers of all the important information about investments.