FEWER CLIENTS. MORE PRODUCTIVE ASSETS. Following those two principles usually means you’ll be successful. Yet there’s a third principle many advisors don’t talk about openly: discounting fees to attract and keep wealthy clients.

According to PriceMetrix, which collects and crunches North American retail wealth management data, the average discount off the firm’s equity schedule for households with more than $2 million in investable assets is 49%. For households with less than $2 million, the average discount is 33%.

The numbers show this makes sense. On a $1 million account, 1% is $10,000. On a $5 million account, it’s $50,000—but serving that $5-million client doesn’t take five times the work. These clients’ transactions are also larger: the average trade for households with more than $2 million is $51,515, versus $14,438 for everyone else.

Your high-net-worth clients are doing the math, too. They know the difference a few basis points make for millions in assets under management, and they’re ready to switch advisors to save that kind of cash.

As a result, most advisors we spoke with opt for a tiered fee structure that favours wealthier clients.

For example, six years ago, Mawer Investment Management in Calgary introduced a Class O fund that doesn’t charge management fees directly. Fees are tiered, and drop below 1% on a weighted-average basis after $2 million is invested. “That’s where we’ve found economies of scale,” says Greg Peterson, director and portfolio manager. “The cost of servicing, travel, opening accounts, and investment management get covered off by that point.”

David Bluteau, a Halifax-based Wellington West advisor whose clientele are largely physicians, will discount separately managed accounts for his wealthier clients. “The standard is about 2.75%, and we bring it down to 2%,” he says. “We try to be more competitive than a mutual fund, but at 2%, people still say that’s costly.” If affluent clients still express concerns, he puts them in a fee-based brokerage account that charges a flat 1%, which is oftentimes tax-deductible.

“For a smaller client, I’m less inclined [to do that],” he says. Instead, he’ll enumerate the services his clients get, such as investment advice and assistance with cash-flow management.

Desjardins Securities advisor Rock Pelletier follows his firm’s schedule, which charges incrementally lower percentages for fixed-income and equity investments as a client’s assets rise. The scheduled percentages stay constant after $2 million at 1% (stocks) and 0.6% (fixed income).

“We have leeway to give a [further] rebate, but we don’t do that often,” says Pelletier, who’s based in Brossard, Quebec. “I’ll discount if it’s an account above $4 million.”

For Mark Starratt, a Richardson GMP advisor in Calgary, “There is a certain amount of flexibility as the value of the portfolio gets higher. But normally the introductory pricing is the pricing we will do throughout the relationship.”

A client moving from $2 million to $10 million wouldn’t get a discount, says Starratt. “There’s a minimum fee based on size of the assets, and then all other services are value-added. We don’t discount because of the value we believe we bring.”

Desjardins Securities advisor Marie-Andrée McSween prices with a view to the future. “Especially on mutual funds, the rates are going to [decrease],” so she’s trimmed her fees accordingly. “We’re acting as if we’re ten years ahead. I don’t want clients to ask for discounts [later].”

As a result, she doesn’t deviate from her fee schedule. “It’s scrupulously respected, because our clients know and have referred one another,” she says.

McSween also isn’t afraid to raise the price when she performs additional services. “We have clients with more than$5 million who have other brokers. We do performance comparisons, so we’ll add a couple points to their fees.”


Of course, you’ve got to hold the line somewhere on discounting. That’s when you tout your education and breadth of offerings.

To be able to advise on many topics, Marilyn Trentos, an RBC Dominion Securities portfolio manager in Richmond Hill, Ontario, has her insurance, options and commodities licences. Yet she deliberately refers clients to specialists.

“If my clients want to invest in commodities, I prefer they work with someone who deals with them specifically,” she says. “I don’t think you can be both [a specialist and a generalist].” Trentos obtained the licences in order to gain enough knowledge to have the initial conversation with clients, and then call in experts.

And if you aren’t knowledgeable in a subject area, pound the pavement looking for answers.

For instance, McSween discovered her clients were bringing their accountants tax forms on a staggered basis, instead of all at once, resulting in extra charges.

“That summer, I visited five accounting firms in the area,” says McSween, who’s based in Salaberry-de-Valleyfield, Quebec. She asked what they’d need to efficiently prepare tax returns, and used their suggestions to create a tax package for clients. It includes reports showing capital gains, dividends, fees and interest from all investments, as well as a customized letter outlining what tax forms to expect and when. That way, a client only has to make one trip, and “the accountants are raving fans,” says McSween.