Prospective Client Understands Fees

Prospective client understands fees is a Driver of Elevation Goal 1: Making great first impressions, increasing conversion

Data based on responses to the question, asked in the First Impression review form

“How do [adviser’]’s fees work?”

Possible responses
  1. They charge a fixed fee
  2. They charge a percentage of assets
  3. They charge a combination of fixed fee and percentage of assets
  4. They charge an hourly fee
  5. They have a different fee structure
  6. Not sure

Prospective Client Understands Fees Score

Proportion of respondents answering “They charge a fixed fee”, “They charge a percentage of assets”, “They charge a combination of fixed fee and percentage of assets”, “They charge an hourly fee” or “They have a different fee structure” 

Relationship between Prospective Client Understands Fees and Conversion Rate

The relationship between Prospective Client Understands Fees and Conversion Rate is highly statistically significant

Why do we ask about Prospective Client Understands Fees?

Our research with firm management teams, advisers and clients indicated that prospects understanding how an adviser’s fees are calculated helps give them confidence to make a decision regarding whether to become a client of the adviser.

We confirmed this relationship quantitatively through our review forms. 

How to improve your score:

Confidence in your structure. Be confident explaining your costs and charges - very few clients shop around or choose an adviser based on their fee. If your client isn’t happy with your fees, it’s better to know before you engage rather than receive a complaint further down the line when they’ve eventually worked them out.

Transparency. Allocate more time and emphasis on explaining fees with your client during your initial meeting. Remember that most clients will either have not taken advice before or may have received a basic explanation from a previous adviser, who could have used a different charging structure. Be clear and transparent with your structure. 

Example. Work through an example of fees with your client and, if you charge a percentage of assets, include a market movement into the example so your client knows what to expect in this situation. 

Follow Up. Include details of the fees in your follow up communication with your clients. You could also link to a fee-calculator on your website, if you have this, so your client can input the numbers themselves and confirm what you’ve said. 
Examples & Variables. Ask your client a question about what a market movement, a withdrawal, or a new ad-hoc piece of work would have on your fees to confirm their understanding. Run through several models with them to ensure they understand fully. 

Whilst it may seem counter intuitive to draw so much attention to your fees by testing your clients on them, by helping clients understand your fees completely, you reduce the risk of future complaints and increase advocacy. 

Being clear, upfront, and confident explaining your fees, and then testing your client’s knowledge to ensure they understand. That way, your client will feel more comfortable about what they’re paying and you won’t get questions (or complaints) about fees later on! 

How did we do?

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