FINANCIAL PLANNING
FINANCIAL PLANNING It’s Not About the Fees It is about the value that you offer. Lance Armstrong, the now disgraced cyclist who was stripped of his seven Tour de France wins, titled his autobiography, It’s Not About the Bike. His book was published at the peak of his career and documented his extraordinary recovery from cancer and his remarkable return to the peak of cycling. In a tell-all interview, he admitted to Oprah Winfrey that in fact he had taken performance-enhancing drugs throughout his cycling career, despite his repeated denials and protestations of innocence. We now understand why it wasn’t about the bike. It was about the drugs that enhanced his already amazing athletic ability. Despite Armstrong’s illegal attempts to boost his performance, it would be tough to argue that he doubted his value as an athlete. In fact, in his Oprah interview he Clients do and always have paid fees, even though it may be called commission. You’re not “starting” to charge fees, you always have. said that he did not believe one could win the Tour de France without cheating in the way he had. If ever someone believed that they were worth every cent of their financial success, it was Lance Armstrong. Self-belief in his own value is the lesson that I believe Lance provides to financial planners. In my recent work with a wide range of financial planners the issue of fees is increasingly raised as a critical issue. Financial planners are struggling with how they charge fees for their work. And in this grappling, the conversations I have with them tend to focus on the mechanics of fee payment. “My clients won’t want to do an EFT every month or set up a debit order to pay me,” is a common refrain. So too is the one, “Clients have never had to pay for financial advice, so they are not going to start now.” As we know this is a self-delusional excuse. Clients do pay for their advice; it is just that many are unaware they are doing so — they think they are paying for a product. The most common lament I hear from financial planners is, “The industry needs to set the standard so that the client understands that paying fees is the norm. If I start charging fees now, the client will just move to someone who doesn't charge fees.” Just to confirm, clients do and always have paid fees, even though it may be called commission. You’re not “starting” to charge fees, you always have. Just as Armstrong said, “It’s not about the bike”, so too for financial planners, “It's not about the fees”. What brought this home to me again recently was the story a financial planner shared about their frustration with a potential client they lost. “I had three very good meetings with the client, I helped them understand their situation and told them what I thought they should do. They said thank you very much and went and implemented my advice with…” In this case the client went to a big blue institution, but it could easily have been with another advisor, or even by themselves. This financial planner had spent valuable time in three meetings, applied their mind to the client’s situation, done some research outside of those meetings, and yet got no recognition of the value they had added other than a “thank 50
Perpetual Guardian, a New Zealandbased financial services firm, moved to a FINANCIAL four-day week PLANNING in late 2018. Productivity improved 20% over an eight-week period; an independent survey showed staff stress levels reduced and work-life balance improved from dramatically. As you think about innovating to keep up with constant change, don’t get stuck on technology and forget about your people. They may just end up working for a business that has found a real way to make a dent in traffic congestion! o surprise, then, that Ricardo Semler, a R20k, and that the process usually involved References ighly successful, innovative industrialist four meetings. The potential client had David Rock, The Neuroscience of Leadership When a client nd entrepreneur from Brazil, wrote a experienced so much value in just one – Improving Organisations by Understanding ook entitled The Seven Day Weekend. He aspect of the first meeting that they were comes the Brain, Talk to at see FPI Convention, you, 2012 ncourages employers to think differently moved to ask if this was R20k per meeting they Morgan are Housel, not The paying advantage of being a bout how they manage their people, and – not because they didn’t want to pay the little underemployed, www.collaborativefund. for your time. ore importantly, how to get the best out fee but because they thought given the com, 17 May 2017 f people. He argues that technology that value they had already experienced, this Ricardo Semler, The Seven Day Weekend, as supposed to make life easier such as was a possibility. Penguin Publishing, 2004 aptops, cellphones and email, has actually Robert Booth, Four-day week: trial finds lower ncroached on people’s free time. The value in people stress and increased productivity, www. But as he says, this can be a good thing In a knowledge-based economy, when you theguardian.com, 9 February 2019 you”. There had been no talk of fees. But more importantly meetings to be in a position to complete her diagnosis and share f you have the there autonomy had been to no get talk your of what work value the are planner providing will be a adding professional her insights service and based advice. The McKinley advisor Corbley, gave the Microsoft client time, Japan effort, Recently one on your to own the terms client. and And to here’s blend the your thing. It’s on not knowledge, about the fees, experience, it’s experience thinking and expertise, and Gave for free. their Employees a 4-day Week – and ork life and about personal the life. value. He suggests that interpersonal skills, to quantify This approach anything to financial Productivity planning Skyrocketed is a legacy by of 40%, the sales www. nnovative employers If you don’t, will eventually like Lance Armstrong, realise believe in terms in your of time own value, – be it industry your employees’ from which the goodnewsnetwork.org, financial planning profession 8 November was 2019 then the discussion about fees is a red herring. When I go to see born. A salesperson is happy to put in effort in the hope of hat people may be more productive if they working hours or the time spent with a LinkedIn Talent Solutions, 2019 Global Talent my doctor, I don’t even think about the fact that I have to pay making a sale and understands that not all effort results in a sale. ave the flexibility him. 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Note, I said to be true professionals then every time a client meets with you, The importance of value was to innovate with respect to how you get May 2019 advice. Not time. Because when a client comes to see you, they they should know that it’s going to cost them. 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In fact, he supposedly said to Picasso, “Name mechanics of how fees will be ptions in a more rigorous and creative giant Dell implemented flexible work your price.” Picasso took a charcoal pencil from his pocket charged and paid. This is an ay than if and the quickly client drew had the simply image tried of a goat. practices He then said in 2009. to the US fan, healthcare important company topic for another o do it on “That’ll their be own. 0 No 000.” doubt The fan was the astounded, Humana saying, did “But the that same article. in 2016, Until you using recognise xperience and only thinking took you that 30 seconds this planner to draw.” Picasso technology then crumpled to enable up call-centre that when you workers meet with a ad done over the napkin many and years stuffed made it into this jacket to pocket. work “You from are home. wrong,” client you are adding value he said. “It took me 40 years.” and should be charging eeting very impactful. More recently Microsoft in Japan This story is a challenging reminder that clients are paying for for that value, then it is not When it came your to experience, discussing expertise, the financial insights and experimented ability to connect with with a four-day about the week fees, it for is about lanning fee, them planner and “diagnose” mentioned what they that need. their As we employees. saw in the story Without your an perception adjustment of the value Rob Macdonald, Rob Macdonald, Head Head of of Strategic Advisory he upfront of financial the client planning who went to fee the was big blue, in the remuneration. advisor had three The result? you add Productivity as a professional. Services Advisory at Fundhouse Services at Fundhouse Former FPI Financial Planner of the Year Wouter Fourie, will be talking about how to position your fees with clients at this year’s Humans Under Management virtual conference on 15 September 2021. For more information and to buy tickets, go to: www.humansundermanagement.com./southafrica2021 4 www.bluechipjournal.co.za
