Uncovering the Reality of Wealth Management Fees

Written by: Amit Dogra | Tru Independence

I'm excited to share with you the tru(ths) and insights about the wealth management industry, whether you are a financial advisor or an investor. You can catch regular updates from me here (and other venues coming soon!), so please make sure to tune in, comment, and subscribe if you like what you hear.

Now since this is the inaugural post, we have to do something special to mark this momentous occasion!

Yeah…I got nothing.

So, instead let's speak the (tru)th about the very first topic: Fees.

That's right all you sports fans and Swifties, there is no such thing as a free lunch and cost is only an issue in the absence of value. So, why is it that we are more than willing to part with thousands of dollars to see Taylor Swift in concert, or go watch our favorite sports team win a championship in person, but balk at paying the person who is managing our financial future? What is the value you are not getting or not think that you are getting and why aren't you asking about it?

As wealth managers, we need to understand that we live in an instant access world where information is at our fingertips. So, if you're clients can't easily answer for themselves, “What do I pay my financial advisor?” You've got a problem. If part of your thinking is that your clients are price sensitive and discussing the fees would provoke an awkward conversation for you, or they might question what they are getting for your service, you would be wrong. 

Whether it is buying a car, going out to dinner, or booking flights for your vacation, people are used to knowing upfront what they are paying for what they are getting. Transparency is table stakes these days, so if clients are confused or are unaware of cost, they eventually move on. As a wealth manager, you do so much more than just manage money or create a financial plan, so you need to take credit for it. When it comes to discussing your fee, most advisors will share the cost at the end of a meeting, often leading to the clients asking, “So, what do I get for that fee?” which forces you to summarize an hour meeting into a quick, minimal explanation of what you do.

Instead of ending your meeting with your cost, start the meeting with telling your client what your fee is, and then let them know for the rest of the meeting you are going to explain all the things you do for them to earn that fee. If they don't see value in what you do, then they're not the right client for you. Time to move on and that's the truth. 

Related: The Power of Referrals for New Business