A Fee-Based Advising Model Can Improve Your Client Relationships

By W.J. Rossi

The idea of charging clients a fee upfront can be off-putting for some advisors who worry their clients may be unwilling to pay the fee – but income is not the driving factor for most fee-based advisors.

A fee-based model can help you focus on creating and maintaining client relationships, all while bolstering trust and adding value to your financial advice with a new level of objectivity.

Establish Yourself As A Trustworthy Resource

Prospects can often be hesitant to connect with commission-based advisors for initial meetings, for fear that the advisor may use that time only to try to sell a product or policy without gaining an understanding of their specific needs and preferences.

That’s why it is so important at an initial client meeting to listen to the client’s immediate concerns and prove that you are invested in them, not just their income.

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Providing a free introductory consultation is a great starting point to enhance credibility. If the first consultation with a new client is free, the client will know that you are not solely interested in their money, and you’ll have the opportunity to showcase that you want to gain insight into their specific situation and decipher how you can tailor your services to best suit their needs.

In doing so, the client will see that you’re creating a relationship and letting them decide to work with you without preliminary commitments, which helps to build their trust in you.

Provide Valuable Financial Advice

Maintaining a solid client relationship after it has been established depends upon your ability to provide outstanding service and quality advice. Many advisors offer the policy or product that gets them the greatest compensation, which waters down the value of the advice that they offer.

When the client feels that their needs are not at the forefront, they will not deem your services as necessary. It is important to put your client’s immediate financial needs of ahead of your own interests to deepen your connection with them.

Let’s say your client tells you that they are interested in covering one specific asset, but you recommend that they cover all their lucrative assets. This interaction, while it may be genuinely in their best interest, can come across as a money grab if you are making commission on the sales, making all your future advising sessions seem ingenuine.

Taking the time to listen to their concerns and provide them with proper advice to resolve their issues solidifies your commitment to your clients.

Objectivity Builds Relationships

Though it may not be apparent, clients truly appreciate paying a fee when an advisor combines their wealth of knowledge with the objectivity that shows clients that they understand their unique needs. Clients are often just looking for advice – there isn’t always a need for an immediate purchase of a full coverage plan.

Having a simple conversation on the best practices for properly allocating their funds, or discussing what the client’s best interests are for their investments, builds the connection between you and the client. Some may argue that it’s unnecessary to pay a flat fee when others provide the same service for free – but the services are not the same.

Since the advisor will no longer feel pressured to make a sale, they will be able to thoroughly connect with their clients on a deeper level. The in-depth communication and advising that comes along with fee-based advice is unparalleled.

The confidence required to begin charging a fee can be difficult to acquire, but both your team and your clients will value the result of the fee-based model. Charging a fee is a way for advisors to be paid for their objectivity, rather than for sales. The reliability that you can instill in your practice with this model will strengthen the connections with your clientele.

About the author
William J. Rossi, III, (W.J.) CFP, ChFC, is an 18-year MDRT member and Partner at Koss Olinger where he began his financial services career. W.J.’s areas of expertise are investment management, estate planning, and creating income distribution strategies during retirement.