How to handle clients’ sticker shock

By Allan Janssen | March 12, 2024 | Last updated on March 12, 2024
4 min read
Angry client

As the cost of financial advice continues to become unbundled from products, financial advisors may encounter more clients who say, “You’re charging me how much?!”

It seems some people just don’t understand the value of your service.

A 2023 survey by the Financial Services Regulatory Authority of Ontario (FSRA) found that among people who do not work with a financial advisor, 32% said they don’t want to pay for financial advice, and 27% said they can’t afford to.

Dan Collison, partner with Toronto-based Advice2Advisors, said a client saying they “cannot afford” the fee could indicate they have little understanding of how financial planning works or how the fees are calculated.

“People are afraid to pay for something they don’t understand and have little or no way of quantifying,” he said. “Is it about investments, insurance, debt management, cash-flow planning, retirement planning, estate planning, all of the above? There is a lack of consumer knowledge in the entire sphere, which is exacerbated by a general lack of financial literacy.”

Duncan MacPherson, a business coach with Kelowna, B.C.-based Pareto Systems, said one way to manage sticker shock is by reframing the client’s understanding of the service you provide.

“When a client asks you to sharpen your pencil, it’s clear that they don’t understand or appreciate the value of directional financial planning and advice,” he said. “The client should be focused on what you’re worth, not what you cost.”

MacPherson, who specializes in advice to fee-for-service practitioners in such areas as financial services, insurance, mortgages, accounting and law, said prospective clients need to be educated about what they’re buying.

“The client needs to appreciate that a financial professional does not just manage money,” he said. “Rather, they have a process that puts every piece of the financial puzzle together as the client’s life unfolds and their needs evolve.”

He said effective financial planning is “panoramic and all-encompassing” and could include things that are not even relevant to the client at the moment, but will become central as the years go by and life becomes more complex.

“We need to get out in front of those evolving needs,” MacPherson said.

The FSRA survey found that 21% of Canadians who do not work with an advisor believe they can make sound financial decisions by themselves. But Collison said most clients who believe they can do their own research are fooling themselves.

“Some might be very interested in the markets and study them sufficiently to help with their own investments, but the vast majority of consumers will not. Certainly, being able to construct and properly run their own financial plan is well beyond most people’s capabilities,” Collison said.

FSRA also found that more than half of respondents (53%) would be more likely to seek financial advice if they could negotiate the fees. But MacPherson said that’s a dead end for financial planners.

“We tell advisors never negotiate your value, especially to try to win someone’s business,” he said. “When a prospective client says they’ve met with other advisors who agreed to lower their fees to get their business, that should be a huge red flag. You need to tell them it just wouldn’t be a good fit.”

Perhaps the most troubling statistic in the FSRA study is that 14% of respondents said they simply don’t trust advisors.

Collison said this gets to the heart of how to make a client feel comfortable. A shortcut to developing trust with clients is to build a network in which you can solicit referrals from colleagues in related services.

“Basically you’re piggybacking off the trust of those doing the referring and introducing,” he said.

Once you’re face to face with the client, you can continue to build trust with a thorough intake process.

“Asking great questions about them and their goals will go a very long way in building trust quickly,” Collison said. Done well, those conversations will demonstrate the high level of knowledge you bring to the relationship, underlining your status as an expert deserving of proper compensation.

He acknowledged that a large part of fee objections stem from the confusing structure of the traditional side of the financial services industry.

“Unfortunately, the industry has historically done a poor job on fee transparency, and they continue to obfuscate the situation,” he said. “The industry prefers to show fees as a percentage of assets managed, rather than dollar amounts, which does little to add to transparency.”

By contrast, the advice-only side of the industry has made great strides in erasing that confusion.

“I think there is a growing groundswell arising from these industry challenges that is actually being spearheaded by quality advisors and planners looking to shed the problems and lack of transparency,” he said.

Collison, who taught personal finance to MBA students for over 20 years, said there’s a lesson to be learned in how people assimilate information.

“The more my students saw the complexities of personal finances, the more they appreciated professional advice,” he said. “Once they truly understood the services that they should receive in their own planning, they were far more open to paying for advice from great advisors.”

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Allan Janssen

Allan has been a journalist for nearly 40 years, writing for daily newspapers, consumer magazines and trade publications both in Canada and abroad. He has been with Newcom’s financial team since 2020. Email him at