I think that the most successful financial advisors will be paid for their wisdom, in addition to any compensation they receive for product sales or assets under management. --- Dan Sullivan, Strategic CoachThe words above come from a new interview with Dan Sullivan who points out that most advisors don't think of being paid for their wisdom. This got me thinking (even though I'm currently on a golf/wine/gambling excursion in Niagara Falls). He's right.
Most advisors stay away from fee-based services. They give away their wisdom in anticipation of a sale. This is what Seth Godin might call the "free prize inside". Do your clients recognize and value what you give them for free?
Two Ways To Charge
Some advisors do charge for their services. There are two models:
- car repair model: charge for each service (e.g., a financial plan costs $x)
- furnace maintenance plan: charge an ongoing fee (e.g., based on assets or income)
Among the advisors I see, ongoing fees encourage clients to ask questions without pressure. Rather, the client receives education and an opportunity to buy. Trust seems higher and relationships longer term. So implementing product solutions becomes easier.
Your Value Proposition
Why should your clients pay you for services they can get for free from other advisors?
If you consider lawyers, accountants, clergies, psychiatrists, doctors or any of the helpers in our society, the financial advisor is the only one who combines two fundamental dimensions, the financial and the emotional. --- Dan SullivanMost professionals charge for their services and enjoy high credibility. Think of accountants, architects, doctors, engineers and lawyers. Most financial advisors won't and don't.
- Dan Sullivan Interview (Sept, 2007, Financial-Planning.com); covers other topics too
To acquire knowledge, one must study; but to acquire wisdom, one must observe. --- Marilyn vos Savant