Six ways advisors can turn fee objections into opportunities

Many consumers are price-conscious. Recent market volatility has only heightened investors’ concerns about getting value for every dollar they pay for financial advice. Even if you already have a well-developed approach for discussing the amounts charged by your practice, there are benefits to constantly refining your strategies and ensuring that every member of your team capably handles any objections to fees. These client conversations will go much better if you and your staff observe some of the best practices for discussing how your firm is compensated for the expertise you provide.

1. Don’t ever get defensive

Sometimes clients or prospects become exasperated or suspicious and react with comments like “That’s a lot of money into your pocket” or “A 1% yearly fee could be a big part of my return in some years.” In these instances, you might find it difficult to resist the urge to quickly blurt out that your fees are in line with industry standards or that clients get a lot of support for the amount you charge. Your manner and tone, though, will be just as important as the words you deliver. If you sound defensive or the least bit insulted, that could lead some people to conclude your compensation isn’t justified or even cause you to lose a potential relationship. As part of a training practice, particularly with new hires on your team, it may prove valuable to conduct mock conversations with prospective clients so that everyone on the staff is prepared to handle vociferous objections.

2. Get more details about the source of the objection

When you know the detailed answers to a topic someone may have only a passing familiarity with, it can be tempting to interrupt them and answer the concerns you suspect you will hear. Remember, though, that you are not only conversing about fees. You are also demonstrating to prospects the relationship they will have with you as a client. Letting them fully express themselves demonstrates you’ll be a good listener. You may also uncover why they object to the fees you charge, and that information will leave you better equipped to address their specific concerns.

3. Don’t make any assumptions and only address objections raised

If a Millennial prospect says, “Your fees seem really high,” you might be tempted to position yourself against robo-advice and explain why automated financial planning tools provide limited services for the low fees they charge. But you might be discussing a potential competitor that a prospect might not have even considered until you raised the issue. By listening first and asking why someone thinks your firm’s fees are high, you can make sure you address only the sources of their objection, without further clouding the issue in their minds.

4. Have a confident and detailed answer for the compensation model you use

Regardless of whether you have a commission-based, fee-based or hybrid compensation model, having a prepared detailed explanation for why you chose your compensation structure—highlighting why you think it best serves clients—will help them understand the issue. They will also appreciate the thought you have given to it. Again, your tone – especially when it conveys confidence and patience with someone’s need to know more – will convey the benefits of working with you just as effectively as your detailed explanation.

5. Provide a glimpse of all the services clients receive

Clients may be less concerned about the fee they will have to pay once they thoroughly understand all the services they will get in exchange. Helping them achieve the best possible returns on their investments is the primary service you offer but explain how much more they can expect. Mention the support you provide in helping clients stick to their long-term plans during short-term market volatility. Preview the steps you take to limit the tax impact on clients’ investments. Discuss the coordination you can provide with other professional advisors, like estate planning attorneys and accountants. Let prospects know about the consolidation you can deliver with a lifetime of personal and retirement accounts across multiple institutions and employers. Talk about the heightened diversification—and reduced redundancies and overlap—you can bring to client portfolios. Summarize the guidance you offer when people are navigating milestone events in their lives. Cite examples of the financial education you can provide to them and all members of their family. Discuss how you personalize portfolio strategies and mention to prospects who seem interested how you can help them incorporate their values into investing.

6. Have a written document, with details of flexibility, as appropriate

Clients may be unable to follow some of the details easily or even forget them once they leave your office. Having a print or digital document that provides a simple visual summary of your compensation will aid their understanding. Be sure to let prospects know whether your fee structure has any flexibility, depending on the services they want, or if you also offer lower fees for younger family members who may be just starting out as investors but still need of guidance from a professional advisor.

Every objection is an opportunity

As with most other objections, concerns about fees should never be viewed as an obstacle that must be overcome. They are just windows to how a client or prospect thinks. Taking the time to explore an objection to fees, and having well-thought-out responses to it, can turn a hard “No” into an enthusiastic  “Yes.”