At the start of a client/financial advisor relationship there is extensive paperwork that must be completed and acknowledged received, including information regarding fees. The level of understanding of those fees, or if the client is even aware or paying attention to the forms they are signing is a completely different story. Once that newness wears off, how often do clients want to discuss fees? How often do they feel their financial advisor talks about fees with them?
Thirty-nine percent of wealthy investors would only like to discuss fees with their primary financial advisor when the client asks about it, according to a recent report from Spectrem Group regarding fees. A quarter (26 percent) of wealthy investors indicate they would like to discuss fees with their advisor on a regular basis, while 16 percent do not ever want to talk about fees. The frequency of desired discussions regarding fees varies significantly based on occupation and age.
Educators and investors in Information Technology are more likely than other occupations to only want to discuss fees when they bring it up, with 46 percent and 48 percent feeling that way, respectively. Over a quarter of Professionals do not ever want to discuss fees with their primary financial advisor, while 15 percent of Senior Corporate Executives and Managers want to discuss fees every time they get together with their financial advisor. As age increases, so does the desire to discuss fees only when the client asks about it. Nearly a quarter of Millennials would like to discuss fees with their primary financial advisor every time they get together.
With the desired frequency of discussions regarding fees being clear, how often are financial advisors discussing fees with their clients? Thirty percent of wealthy investors indicate that their primary financial advisor never discusses fees with them. Another 30 percent indicate that fees are discussed only when the client asks about them. Seventeen percent discuss fees with their primary financial advisor on a regular basis and 10 percent discuss fees every time they meet. This leaves a significant gap between desired and actual for those clients who would like to speak about their fees on a regular basis, or every time they meet with their primary financial advisor.
Financial professionals should establish with clients at the onset of the relationship how often the client would like to discuss fees, so there is not a perceived communication gap that could lead to distrust and decreased satisfaction.
Related: Are You Charging Enough?