My Experience as a Fee Discloser

On the other hand, I also have conversations with advisors who didn’t take the time to research my pricing. Price ends up begin discussed at the end of the meeting. That limits the time I have to justify the value of what I do. More often than not, these deals require another meeting to close, or they don’t close at all.

I recently decided that I’m going to request that all prospects visit my website pricing section before our first meeting.

Why most advisors don’t do it

When I design a website or brochure, I suggest that we include a fee section, usually on the service page. Less than 33.33% of the time the advisor does it.

This is what advisors say:

• Arrogance over the value proposition. Who cares what I charge? I have an incredible value proposition and they never doubt it’s worth the money.

• Normalcy. I charge the industry-standard fees.

• I don’t want to present price without the opportunity to justify my value first, because I may scare people off.

• It’s too complicated.

• They trust me and don’t care what I charge.

• It’s in my ADV (which nobody reads, btw)

I’ll get to the value discussion a bit later on this article. Suffice to say that the value objection is the only half plausible one on the list above.

What is transparency?

A window is transparent. What makes it transparent? I can see through it and the objects on the other side are correctly perceived without effort required on my part.

Now, if the window has a curtain covering up part of it that conceals objects behind it, it is not transparent. If the window has Hello Kitty glitter glue smeared on it so that the objects behind it are not able to be distinctly beheld, it is not transparent.

What is the definition of fee transparency in a sales situation between an advisor and a prospect? Fee transparency can be defined this way:

At the point of considering your services at any level (serious or not), the prospect is made aware of any and all fees that they will be expected to pay during the course of the relationship. This includes onboarding, the time he or she spends being your client, and termination of the relationship.

I don’t care if you have a good reason for it. If you are not disclosing fees on the website and in all marketing collateral that a prospect who comes to you is potentially going to look at it prior to relationship initiation, then you cannot call truly yourself a transparent advisor. There is no, “Let’s hint at it and talk more in depth later about what is behind the curtain or Hello Kitty glitter glue,” in true transparency.

Transparency is:

• Immediate
• Upfront
• Comprehensive
• Clear

There is no “kinda” here. This is binary. Either you are transparent or not. Any lack of transparency creates the sliver of an opportunity for the client to be uninformed and misled

I was once in a meeting with a family member and his potential advisor. He was checking out the advisor. Knowing the game, I asked what fees other than the ones on the website my relative would be charged upon signing up for service. Well, there were quite a few, one of which was a $200 fee to the RIA firm (not the custodian) for the time spent transitioning the accounts over.

Not transparent. First infraction.

Second infraction: The advisor brushed it off by saying how $200 was not a large amount of money. Here’s where I became incensed. How dare you hoodwink my relative out of even a cent of his money? It doesn’t matter if it’s three shekels, folks.

Nasty!

These are the moments when trust disappears. It goes easily and it never comes back completely. And this is why people don’t trust the profession. Until all opacity is gone, the trust issues will persist because it’ll be the 12b-1 fees, the mutual fund management fees, the platform transaction fees that the client was never told about because they “trusted their advisor.” And you know that absolute power corrupts absolutely. They have no clue what they are paying, no idea what it means to be charged fees on AUM, no idea what it means for their advisor to be a broker and earn commissions.

The whole entire conversation has to change. It has to be upfront, a process of real education that frames expectations. It has to start from the first point of contact the prospect has with anything related to your firm. Not until we clean the Hello Kitty glitter glue off the window will the abhorrent reputation that this industry has get any better.

Value? What value?

There is a profound lack of perceived value in this profession. Is it a lack of an articulated value proposition or a symptom of a lack of value itself? Alas, the debate grows quite Socratic.

Why is it that every time I ask an advisor to give me their value proposition, I hear crickets? Blank stare. Emptiness. Silence.

And then if any utterances come about, it is usually in the form of the same five bullet points, something to do with how you are so trustworthy and you treat the client like family. You know the spiel. I frequently ask advisors to tell me a time when they made their clients money or saved them a lot of money. Rarely do I get a satisfying response.

Tell me a time when you cost your client a lot of money? Now there’s plenty to say.

It doesn’t matter if you provide all the value in the world for your clients if you can’t articulate it. Most of you can’t. If your website were to articulate your value proposition clearly, the prospect wouldn’t be frightened off seeing your fee schedule. Unless they are too broke to pay or a DIY client, in which case your attitude should be:

• Adios
• Sayonara
• Au revoir
• Alvida

Sara’s upshot

Put your fees on your website, brochure, and any other marketing you use to represent your services. I have a podcast and am going to be discussing these issues in the future. Please subscribe.

Sara Grillo, CFA, is a marketing consultant who helps investment management, financial planning, and RIA firms fight the tendency to scatter meaningless clichés on their prospects and bore them as a result. Prior to launching her own firm, she was a financial advisor.

Read more articles by Sara Grillo