by Tony Vidler
There are a number of easy ways of working out what fee level is profitable, and it is usually easy enough to work out what fee level is competitive in the market….but that is not the same as understanding what fee level is appropriate.
The appropriate level for any engagement can, and should be, specific to a particular engagement. Of course the basic fee level is going to start from a point where it is profitable for you to do the business, but it should also reflect the complexity of the engagement. The more that a unique or specific set of skills or knowledge are called for, and the more difficult the problem being addressed, the higher the fee.
The real key to getting the fee level right is getting the commitment of the client to the process, or the engagement.
Often advisers are setting fees at a high level as a way of attempting to position expertise – if you are expensive you must be good, right? But an extraordinarily high feel level for a client who is totally nonchalant about the engagement will simply not result in business at all.
Finding clients who want your expertise and are committed to the planning process and then giving it away for free, or low fee, is just dumb.
Even dumber though is setting a low fee to try and work with the non-committal client….which many advisers try in a bid to get business in the door, and hopefully create the commitment from the client once they have seen how good the adviser is.
A high fee makes sense commercially when you have a committed client. A client with a difficult or complex situation, or a client who knows that they need expert help to achieve the goals and dreams…that is the area where high fees make sense, and still be competitive.
That is why the advisers who have a highly priced fee-based business model are excellent at getting the client to understand the extent of the complexity very quickly, and obtaining high levels of commitment from the client to making change.
The key to building a high fee business therefore is being able to lift the commitment levels of the clients to making change. The best advisers are able to do this by working more as a coach than an adviser to begin with. Their advisory skills come into play once the engagement is secured, but it is the coach who gets the business and establishes that the high fees are appropriate.0