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XY+ Workshop: Pricing your advice – Facilitated by Peter Banicevic

XY+ Workshop: Pricing your advice – Facilitated by Peter Banicevic

Peter Banicevic
Financial Planner at Practical Wealth Solutions
Peter Banicevic
Financial Planner at Practical Wealth Solutions

XY+ Workshop: Pricing your advice – Facilitated by Peter Banicevic

Following a post by Lyle Greig around pricing and segmentation, Peter Banicevic put his hand up to facilitate this workshop on what other advisers had to say about pricing advice – the upfront and ongoing fees, calculating cost of advice and positioning the conversation around advice fees to clients. 

Some snippets of the discussion:

  • Jayden Post on positioning his fees – watch here
  • Inbam Devadason on positioning his fees – watch here
  • Mark Lewin on increasing fees for all clients when compliance costs go up – watch here

Here are some of the nuggets of advice gold XY+ members shared in this discussion:

Mark Lewin

You must be clear in identifying your ideal client definition and setting a minimum and maximum fee. This way, once you’ve had the initial phone call to qualify the lead and then had the first meeting, you can more confidently quote your min and max fee range. If your minimum fee is $5k as an example, and the client says it’s too much, this is a hidden gem that tells you they don’t value your advice (or you haven’t properly articulated the value you can provide).

Work out the type of business you’re building and the type of clients you do and don’t want to work with, because you can’t take anyone. For Mark, he wanted clients for 10 years and made this his focus. Not only did it take the pressure off the initial advice fee, but it allowed him to focus on pricing his advice with longevity in mind.

Shared an example of times when the cost to provide advice went up (compliance requirements for example). He and his team decided to write to all clients and explain that their fixed fees had gone up, and the best way they came up to deal with this was to split the increase across all clients, which resulted in an increase of $285 per client. They attached a fee increase form and didn’t have a single issue of a client not returning the form.

Inbam Devadason 

Shared his new client process where he would estimate the amount of time required to service a client. After the initial phone call to understand the client’s needs and before he meets the client, he prepares an advice quote for them. Towards the end of the discovery meeting, he tells the client “we estimate the advice benefit you’ll receive from this relationship will be between $X – $X (this doesn’t include investment returns. It’s based on tax savings and other strategic advice implementation). He then goes through the client’s key objectives and the ways in which Inbam will add value to their lives. By the time he’s covered all of this, he then quotes his upfront fee. Usually, the financial benefits are 3-5 times the cost, making the fee seem valuable and appropriate.

What Inbam is doing here is trying to quantify the intangible value he can provide to help the client better understand the reason for the fee.

Jayden Post

Shared how he articulates the value of his advice. He tells the client there are three ways they can proceed. They can do nothing, do it themselves or he can do it for them. By doing nothing Jayden uses examples like the opportunity cost of missing out on investments or not implementing sound financial strategies, which over a long-term period could equate to $1m. They could do it themselves, where Jayden explains the time, effort and financial resources it’s taken for him to become qualified and an expert in his field, which if added up could easily equate to $500k. Or, the client can engage Jayden to execute their plan, which would cost $10k. 

He summarises by saying, “So, you could do nothing at the cost of $1m. You could do it yourself, at the cost of $500k or I can do it for you for $10k”.

Michael Khouri

Michael shared his experience of changing his mindset to truly appreciate the value he can add to people’s lives, and charge accordingly. It took him to bring an external consultant into his business to help him see this, and he’s improved immensely.

He was previously charging approx $2.2k per client and is now charging $4.8k and has had no push back from clients. He believes the barrier is completely in advisers’ heads and not an issue with clients. They don’t actually know what advice is worth, they just know they need help.

The three reminders that have helped Michael build confidence to charge appropriately:

  • He wants to make sure his business is around in ten years’ time to be able to see his client’s kids go to uni and continue helping people
  • He doesn’t want to cut corners, and the only way to deliver advice cheaply is by cutting corners.
  • Being honest with his clients and telling them he hasn’t been charging what he should have and it took bringing a business coach in to help him lift that confidence.

10/03/2022 ago

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Category:

Ongoing service

Following a post by Lyle Greig around pricing and segmentation, Peter Banicevic put his hand up to facilitate this workshop on what other advisers had to say about pricing advice – the upfront and ongoing fees, calculating cost of advice and positioning the conversation around advice fees to clients. 

Some snippets of the discussion:

  • Jayden Post on positioning his fees – watch here
  • Inbam Devadason on positioning his fees – watch here
  • Mark Lewin on increasing fees for all clients when compliance costs go up – watch here

Here are some of the nuggets of advice gold XY+ members shared in this discussion:

Mark Lewin

You must be clear in identifying your ideal client definition and setting a minimum and maximum fee. This way, once you’ve had the initial phone call to qualify the lead and then had the first meeting, you can more confidently quote your min and max fee range. If your minimum fee is $5k as an example, and the client says it’s too much, this is a hidden gem that tells you they don’t value your advice (or you haven’t properly articulated the value you can provide).

Work out the type of business you’re building and the type of clients you do and don’t want to work with, because you can’t take anyone. For Mark, he wanted clients for 10 years and made this his focus. Not only did it take the pressure off the initial advice fee, but it allowed him to focus on pricing his advice with longevity in mind.

Shared an example of times when the cost to provide advice went up (compliance requirements for example). He and his team decided to write to all clients and explain that their fixed fees had gone up, and the best way they came up to deal with this was to split the increase across all clients, which resulted in an increase of $285 per client. They attached a fee increase form and didn’t have a single issue of a client not returning the form.

Inbam Devadason 

Shared his new client process where he would estimate the amount of time required to service a client. After the initial phone call to understand the client’s needs and before he meets the client, he prepares an advice quote for them. Towards the end of the discovery meeting, he tells the client “we estimate the advice benefit you’ll receive from this relationship will be between $X – $X (this doesn’t include investment returns. It’s based on tax savings and other strategic advice implementation). He then goes through the client’s key objectives and the ways in which Inbam will add value to their lives. By the time he’s covered all of this, he then quotes his upfront fee. Usually, the financial benefits are 3-5 times the cost, making the fee seem valuable and appropriate.

What Inbam is doing here is trying to quantify the intangible value he can provide to help the client better understand the reason for the fee.

Jayden Post

Shared how he articulates the value of his advice. He tells the client there are three ways they can proceed. They can do nothing, do it themselves or he can do it for them. By doing nothing Jayden uses examples like the opportunity cost of missing out on investments or not implementing sound financial strategies, which over a long-term period could equate to $1m. They could do it themselves, where Jayden explains the time, effort and financial resources it’s taken for him to become qualified and an expert in his field, which if added up could easily equate to $500k. Or, the client can engage Jayden to execute their plan, which would cost $10k. 

He summarises by saying, “So, you could do nothing at the cost of $1m. You could do it yourself, at the cost of $500k or I can do it for you for $10k”.

Michael Khouri

Michael shared his experience of changing his mindset to truly appreciate the value he can add to people’s lives, and charge accordingly. It took him to bring an external consultant into his business to help him see this, and he’s improved immensely.

He was previously charging approx $2.2k per client and is now charging $4.8k and has had no push back from clients. He believes the barrier is completely in advisers’ heads and not an issue with clients. They don’t actually know what advice is worth, they just know they need help.

The three reminders that have helped Michael build confidence to charge appropriately:

  • He wants to make sure his business is around in ten years’ time to be able to see his client’s kids go to uni and continue helping people
  • He doesn’t want to cut corners, and the only way to deliver advice cheaply is by cutting corners.
  • Being honest with his clients and telling them he hasn’t been charging what he should have and it took bringing a business coach in to help him lift that confidence.