A question for advisers: When was the last time a client demanded a fixed fee?
Clients do occasionally want a breakdown of their invoices. Not often, but when they do ask we are able to provide them with a full breakdown, every minute, listed and itemised into chargeable and non chargeable.
But the truth is clients are far more concerned with the outcome than the detail of charges. Maybe it’s a bit like having nuclear capability – having the ability (and desire) to be open about the detail of fees means that clients don’t need to use it.
Very few of the new clients we meet want lots of detail on our fees. They want to know what we can do for them. They want to have an idea of the cost so they can budget. But they rarely go shopping to compare our fees with others (something that is still very hard to do). Usually new clients have been referred by an accountant or solicitor, and are used to writing out a cheque for time. Bluntly, they rarely quibble our fees.
So when I read a headline like ‘IFAs fight back over calls for fixed fees’ I can’t help but wonder – calls by whom exactly? Not clients, that’s for sure.
The downside of such articles is that it can creates a false impression of the client/adviser relationship and puts off people from taking financial advice who may be far better off for having done so – even after the fees!
Of course, we don’t help ourselves. Many years ago I realised that the expression ‘fee based financial advice’ was actually a terrible marketing approach. What has the fact that it’s paid for by fees got to do with anything? You don’t see solicitors advertising ‘fee based legal advice’.
All day every day there are articles comments and blogs about how we charge for our services. How about a bit more focus on the outcome? Comments in the media from happy customers.
Now, before I’m accused of being disingenuous, I do get the idea that consumers need champions. I understand that the adviser/client relationship is one of trust and that this trust has been abused in the past by advisers taking big commissions. There are bad news stories out there, and it’s important the public are made aware of advisers recommending UCIS so they can be paid commission, to name one example.
I think Paul Lewis made a fair point when he talked about ‘ghosts of commission’. I don’t think a fixed 3% on all investments can be called a ‘fixed fee’. I get all that.
But I also think it’s true to say that clients don’t particularly care.
What clients care DO care about, in my opinion, is the following, in no particular order:
- Will I be better off by taking this firm’s advice?
After that, everything else is either taken as proven (professional referral) or is checked out in the first meeting during the part of the ‘no charge consultation’ section about ‘what we do and how we charge for it’.
The fact that clients aren’t that interested does mean we need consumer champions. So keep up the good work Paul Lewis and your ilk, protecting the consumer for the more nefarious edge of the financial services world. But please make sure you stress that such instances are the exception, not the rule. If you do not, then we could find that consumer champions make matters worse, not better.
Champion the consumer. But also champion the good work most firms do as well.
Ovation is recruiting for an adviser and a paraplanner. Contact Chris for details