A wise man once told me that no one ever questions your price, they question your value at that price. That is the basis for the current problems advisors have with pending legislation regarding commissions, transparency and accountability.
Like everyone else in the questioning price position, there are two apparent choices.
- Reduce your price
- Increase your value
Reduce your price is always a weak choice unless the price reduction is permitted by improved productivity. Under any other circumstances, it is merely a race to the bottom. Your minimum price becomes your maximum price as soon as you introduce it.
Increasing value at the same price is equally untenable. Value has a cost and it must be passed through. Absorbing it is just another way to lower prices.
Neither of the obvious choices work, so where to from there?
Never let your list of choices be the limit. There are always more.
In this case, the choice is easy. Your clients don’t know all the value that you provide.
Try telling your clients what your value really is. Just like every other human, they take things for granted. Things they take for granted are deemed, at least at first, to be of no value. Therein is the clue to your pricing success.
Back when dinosaurs were common and I was in the accounting business, some clients complained about the fees we charged for dealing with routine tax matters. Our office was the mailing address and there were many things that came our way. Most trivial, but we sent a letter to the client with the correspondence from the government and with instructions about what to do with it.
Some clients who were price conscious decided that was too expensive and thought they could do better themselves and save the money we charged. No problem, said I and we changed the mailing address to their office. None continued the new arrangement longer than a year.
Why? Because they had value recognition thrust upon them. Even trivia is a problem if you don’t know what to do with it.
Same thing for advisors. You get paid for investing money with a manager or earn commissions for arranging insurance. That is not all you do, but that is the part the client, the regulators and the media think is outrageous. You must itemize and remind the client of the things you do for them, Most are not part of their usual observation.
Elizabeth Barrett Browning knew unless you pay attention, you never really understand. Her Sonnet 43 begins,
“How do I love thee? Let me count the ways.”
You too would be wise to help clients count their blessings. An earlier article dealt with some. The Softer Side of Advice
Advisors can help clients know their value with a little effort. Some of it is as simple as asking, “Was that helpful for you?”
Ovid claimed, “ars est celare artem” translated as “The art is in concealing the art” and in some contexts it might be so. If your price is being attacked, concealing any value you provide or allowing others to take same for granted is a weak business practice.
Help your clients know what you do and what it means to them. You will both be happier.
There is no way to please the press or the regulators.
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. firstname.lastname@example.org 866-285-7772