The Toughest Conversation with Clients

August 5, 2014

by Dan Richards

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Good advisors are used to challenging conversations with clients about unrealistic expectations and sticking to plans in tough markets. But going forward, no conversation will be more difficult than the one about how much you charge – especially when we enter the next market downturn.

You need to do three things to handle those conversations effectively.

  1. Be truly confident in the value you’re delivering. If you come across as tentative or defensive, it’s game over.
  2. Be proactive in initiating these conversations. If you wait for clients to raise the topic, it puts you at a big disadvantage.
  3. Most important, shift your mindset away from your process and concentrate squarely on the concrete outcomes you deliver for clients.

Why clients don’t care about your process

If you look at a sampling of advisor websites, you’ll see a proliferation of four-, five- and six-step processes that promote a supposedly unique distinction. These multi-step processes typically have catchy brands and glitzy graphics that are intended to achieve differentiation and convey value, .

There are two problems with relying on this approach to convey value: These processes often look similar and don’t address what clients care about.

It’s no different than when you run into a problem with your car and go to the dealership where you bought it. You have zero interest in the state-of-the-art computer scanning used to diagnose the issue, the hundreds of thousands of dollars invested in the latest equipment or the hours of training that the technicians have received. All you care about is that your problem gets solved quickly and at a fair price.

The same thing applies to discussions about the fees your clients are paying. Most clients are only tangentially interested in your teams’ training and credentials and the process you go through to create financial plans and build portfolios. Rather, they want to talk about what they’re getting for the dollars they’re paying. Today, many advisors struggle with that discussion. Because of the unpredictability of markets, it’s natural that many advisors are reluctant to rely on the returns that they generate for clients. But even if you don’t want to talk about what clients are receiving for the fees they’re paying, many clients are anxious to have this conversation.

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