I’m fortunate to be dealing with several of the best and most progressive financial planning businesses in the Irish market. A common trait among these firms is their constant challenge and revision of their own proposition, ensuring they can deliver ongoing value to their clients consistently and through every interaction.
Another trait that they seem to have in common is that they all enjoy very little push-back from clients about their own charges, whether these are paid by flat fees or trail commission. They each have very simple and transparent charging structures, and never try to duck a conversation about their charges, having enough confidence in what they do and the value they provide.
These firms have all moved way beyond sending out a 10-page report with a template economic summary and a schedule of current investment and pension values. They recognise that there is little value added there and that clients rightly expect more for the trail commission that is being deducted from their hard-earned funds. There is never a half-hearted offer of a review meeting…
So, what should you do to provide value and justify your trail commission?
An important step is to make sure the review meetings happen – whether these are annually, half-yearly or quarterly. A client not wanting a meeting is never time saved and a victory. It is a missed opportunity for the client, and a lost chance for you to add value and further justify your ongoing charges. If a client is questioning the need to meet because they are too busy, offer easy alternatives such a one-hour remote review meetings. Have a clear agenda and send this to the client in advance, setting out the importance of the review. Agenda items might include the likes of the following,
- Revisiting their life goals: This is all about the client. Have their circumstances changed and/or have their hopes, dreams and ambitions for the future changed? Are you and the client still looking in the same direction, focused on the same goals and destination to achieve?
- Revisiting the cost of their goals: How do their changed ambitions and goals affect the plan, if at all? Do they need to spend more, or less? Do they need to save more, or less? Can they retire earlier or is their wealth transfer plan affected? It is so important that you review the impacts of all changes to goals within your client’s future cashflow plan.
- Demonstrate how their plan is still the right plan: You can give the client comfort that previous decisions still hold true, or they need to be tweaked to reflect changes in the client’s life or in relation to their future ambitions. As you know, doing nothing is very often the optimal strategy.
- Review choices and assumptions made: Things change, outside of the lives of your client and outside of your control, whether it be in the economy, the personal finance market or the taxation environment etc. Sometimes action is needed, often it is not. Review and restate the choices and assumptions made.
- Show that your recommended solutions remain the most suitable: Or change them if not…
- Shut out the noise: Deal with your client’s concerns about what they read in the weekend papers or heard in the news that morning. Gently (but firmly) remind them of the long-term planning approach that you have taken together and the folly of them reacting to the news. Remind them of the dangers of attempting market timing, thinking short term and changing their investments based on fads or using the rear-view mirror.
- Be a leader: This will follow from all of the above. If your client sees you as their voice of reason and valued guiding hand, they will seek out your advice at every turn in relation to their personal finances. And they will recognise that this is a highly valuable service and worth paying for.
- Stay in touch: Outside of your meetings, stay in touch with your clients. Keep your clients engaged and educated through a regular, thought-provoking newsletter. Enhance this further with a number of topical webinars throughout the year, bringing in external, expert speakers to add real value to your clients.
Do all of these well and you will have no issues in justifying your trail commission. You won’t be looking to hide your commission levels away somewhere on your website, instead you will want to discuss them with your clients, proudly taking the opportunity to demonstrate to them the incredible value you deliver each year.