Enhancing the Value That You Provide

My Clients Won’t Pay Fees

If you’ve ever heard another financial advisor (or yourself) say these words: “My clients wont’ pay fees” then this article is for you.

Whenever I hear that – and that’s way too often -- my first reaction is always “Oh really. Why is that?” Probably the most frequent answer is “They’re now getting financial planning for free, why would they pay for it?” Actually the answer is quite simple. In order to have someone pay you a fee to do their financial plan, they have to be able to clearly see the value of doing so. And who can blame them for that? It makes sense.

I have a fairly standard multi-step process of demonstrating value. The process involves a number of steps, which will be the topic of another day. Today I just want to provide a look at the final step of demonstrating value. This step involves using a sample financial plan, typically based on another client whose personal information is never disclosed. Actually I always have on hand several sample plans to use, and try to pick one most similar to the situation of the person to whom I’m talking.

Using a sample plan

For example I have a sample plan developed for clients in their mid-40s. They had educational objectives for their kids and some very definite retirement goals. Stated in today’s dollars they wanted to have $8000 per month net after-tax commencing at his age 62 indexed to inflation of 3% until age 105. We typically do a calculation that simulates using the asset allocation that they’re currently using and the amount of savings they’re currently doing.

In this given example our calculations showed that they would’ve had to have an extra $452,000 in the bank today in order to be able to reach their goals. However, when we applied our planning expertise and recalculated everything that shortfall number changed to a positive $242,000. That means for this particular client the value of the planning we did was nearly $700,000. This actually is quite typical. While this is not a guarantee or even a promise, generally accepted financial planning principles and assumptions are always used.

The Action Plan lays it out step-by-step

In order to make this happen we take a look at the Action Plan. The Action Plan details step-by-step all of the things that need to be done over the next year to move them in the direction of achieving their goals. We obviously repeat this process each year adjusting for changes in objectives, current financial information etc.

So the question becomes, does the planning that the client is currently getting measure up? Other techniques that are part of a professional financial planning process could well add greatly to that number. While you can’t promise anything specific, you can show them a sample plan of what you do. Your effectiveness here will be related to the quality of your plan.

What most people like most about this approach is that a very specific Action Plan is included so that they can see exactly what needs to be done. It really helps people believe that their goals are achievable in working with you. The Action Plan shows what action is required, when it is required, why it’s important, and who in the firm will work with them to help them get it done.


The bottom line is that absolutely any client will pay reasonable fees for planning if you are able to articulate the value that they will get for their money. Demonstrating value must be your goal.

When you have developed a sound planning process you will be able to show clients exactly how you can add real value to their life