And How to Answer It
June 21, 2011
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Today, anyone in the business of offering advice is challenged by clients looking hard at the value received for the fees they paid. That’s true of accounting and law firms dealing with large corporations, who increasingly are comparing traditional providers to alternatives in India charging $75 an hour. And given the proliferation of low cost options available online it’s true of individuals when it comes to advice on travel, real estate and their investments.
In the back of their minds, many existing and prospective clients wonder whether they’re getting their money’s worth on the fees they pay. They may not say it out loud – but it’s often there, casting a cloud of doubt about the advisor they work with.
That creates an opportunity for advisors to be proactive in raising the subject of the value you provide when talking to existing or prospective clients, with a question along these lines:
“Some people I talk to wonder about the value received for the fees they pay. Is this something you’re concerned about?”
Justifying fees
I was recently reminded of the concern about the value for money that advisors provide during an interview on Business News Network (BNN), Canada’s leading business television network.
The original purpose of the interview was to discuss advisor designations, but during the interview (which was live so questions came without warning), I was asked whether advisors are worth the fees they charge.
I pointed to Warren Buffett’s line that it only takes two things to succeed as an investor – first having a reasonable plan and second sticking to it – and that it’s the sticking to it part that investors struggle with … and the critical role that an advisor can play in this.
I also referred to research on the extent to which average retail investors underperform the investments they own by buying and selling at exactly the wrong time – and pointed out that the right advisor will almost always avoid this and add sufficient value to justify their fee.
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