If you’re worried about justifying your fees, stop.
Instead, focus on enhancing and explaining your value. Think about what you’ll do if clients see just how much you make from their portfolios each year.
This is better than lowering your costs or culling clients who can’t afford your fees.
The CSA issued a paper on fiduciary duty and fee disclosure last October; the comment period ended February 22.
While the regulator hasn’t made a decision as yet, you’ve got two choices if you’re stressed about black-and-white fee disclosure.
1. You can cut your fees to try to be the cheapest service provider.
2. You can enhance your value and show clients how your services and expertise benefit their returns.
Yes, the paper proposes regulations that would expose your fee structure, but it also offers an opportunity and challenge.
You can rise to the occasion by upping your game, outshining your competitors and proving to clients you’re worth their money.
There are three main ways to increase your value:
1. Have a clear process and explain it upfront.
You could tell clients: “You will receive two investment review appointments per year, along with a monthly newsletter and a quarterly phone check-in from my staff. We also include a written debt and cash-flow management plan in our initial process and review it once per year.”
2. Determine the market value of your services
If you don’t think anyone would pay you directly for what you do, they may never believe in your value. If your services are valuable, however, tell clients how much your advice and expertise is worth and what valuations the estimates are based on.
HINT: Don’t base estimated costs on what you get as commission, but rather what successful fee-based or fee-only firms charge for the same services.
3. Add high-value services to your current offerings
Integrate valuable offerings that can be provided at a low cost per person. For example, offer tax prep and consultations to help clients save and keep organized.
The only way to react to imminent regulatory changes is to adapt. So add value to keep existing clients and attract prospects. If you offer fair and competitive rates and services, they won’t be concerned about fees.