Moving away from a commission-based or asset-based pricing model brings with it some exciting opportunities. When you no longer require a client to have a certain amount of assets to manage, you start thinking differently – you can now start thinking beyond the pre-retiree or retiree client. New markets such as the wealth creator, the small business owner, and dare we suggest it, Gen Y clients are suddenly viable client groups who have been historically poorly serviced by advisers. These are clients who are happy to pay you a fee to help them build their pool of assets, and can be truly rewarding to work with, as you see the tangible results that your advice has on the creation of their wealth.
Of course, all clients, regardless of age, are increasingly looking to see value for the fees they’re paying. They want your services, they’re prepared to pay for them, but they want to know that your ongoing service is meaningful, and that they will enjoy tangible outcomes as a result of your relationship. With annual disclosure statements commencing in a matter of months, if you can’t yet clearly articulate (and actually deliver!) the value of your ongoing service, you might find your recurring revenue decreases, as clients choose not to keep you on retainer.
On the flipside, advisers who have consciously improved their service offering, their business efficiencies and their client experience have no problem in understanding their own value as an adviser, and articulating that to their clients. They’re enjoying strong relationships that are mutually rewarding, and they’re optimistic about their future.
When you go through your process to determine your pricing model, you may well discover you have been charging too little for years, and may be concerned that your clients won’t pay your new fees for your services. First, just check-in with yourself that it’s not you being nervous and not seeing value in what you do. That is a very natural first instinct for many advisers – being surprised by just what it is costing you to provide advice, and feeling a little bit nervous the first time you ask someone to pay what you are worth.
If you do find that the type of clients that you target, and the services you provide, are actually not suitable for you to provide value for the fees that you charge, don’t fret, just cast your mind wider and think about some different types of clients that you can service that will get value and that you will get enjoyment from servicing. This does not need to mean high net worth clients as it may have in the past and it will create great new opportunities.
If you’re keen to grow your business with a new kind of active client, or if you’re struggling to see how you add value to your current target market, you might enjoy a recent piece that our Stewart Bell wrote for IFA, (we love the title – On the Y Front). His piece provides some practical suggestions of how you can successfully engage with Gen Y clients and he shares some great ideas that are also applicable for clients who don’t necessarily fit the Gen Y stereotype – think technology, new tools in your arsenal of advice opportunities to engage them, and importantly, provide truly valuable advice.
To read more about some of the options in each of these areas, please read the piece at the IFA website.