Do you properly value your service?
Having the confidence that you add real value to client relationships enables you to charge more for your services - a fair price that truly represents your efforts. The Supernova process gives you that confidence because you, as an advisor, know that you provide an unparalleled client experience, especially when you follow our 12/4/2 model
The survey says... According to an article by Andrew Osterland from Investment News, fee-based advisors are leaving money on the table when it comes to setting their prices. Software firm PriceMetrix, Inc. analyzed data from 380 million transactions executed in 1 million fee-based accounts between 2007 and 2010 and found a wide range of prices charged for similar relationships on similar-sized, fee-based accounts.
According to the study: "The average fees charged progressively declined from 1.17% on accounts between $1 million and $2 million in assets to 0.63% on accounts with more than $5 million in assets. Furthermore, the lowest quartile of advisors charged 80 basis points for accounts between $250,000 and $500,000 while the highest quartile of advisors charged an average 208 basis points for the same range. It seems unlikely the lower priced advisors are offering service levels of one-third that of the top priced advisors."
Lower pices doesn't mean more business...The data also dispelled the myth that lower-priced advisors are stealing business from their higher-priced competitors. "Those advisors doing the most business tend to charge more," said Doug Trott, CEO of PriceMatrix.
One of the study's conclusions was that advisors might be 'guilt pricing' or lowering fees for the existing clients to make up for perceived poor performance. This may be particularly the case when advisors move between firms and ask their clients to come with them. They feel they have to discount their prices in order to get the clients to follow.
Could Trott be describing you? If you are using the Supernova process, consider explaining to your clients the extraordinary value you bring by implementing the Supernova Standards:
- Contacting all of your clients each month (12/4/2) where four of those monthly contacts are quarterly reviews with 2 of those review on the phone and the other 2 in-person;
- Rapid one-hour response to a client's problem with a 24-hour resolution standard; and
- Multi-generational planning for every client.
The telling conclusion from the PriceMetrix data was that the advisory services are not price-elastic. The satisfaction and loyalty of clients is far more dependent on the advisor's sensitivity to client objectives and instilling confidence than it is in the fees that are charged.
The Supernova Advisor increases satisfaction and loyalty. "This is a high-value service, not unlike what doctors or dentists provide. If you're thinking of getting some dental work done, would you go to the dentist charging 66 basis points or 220 basis points?" concluded Trott.
Click here to learn more about implementing Supernova in your practice.