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The most common question I get is: How do I justify my fees?
Recently, an advisor invited me to a Zoom conference where he demonstrated how he does precisely that. The prospect gave his permission for me to attend. Subsequently, I also observed the second meeting.
The advisor used my Solin Process℠ in a way that, in retrospect, was obvious, yet I had never seen it done before. It was a learning experience.
Question the premise
An issue I’ve always had with the “value” question is that it assumes you can always demonstrate your value. Depending on how much you charge and the unique requirements of the prospect, it’s possible you shouldn’t try to demonstrate your value.
If your fees are AUM based, and a client with $3 million in assets tells you she only needs your help in making investments, it would be very challenging to justify your fee.
There’s another flawed assumption in the “value” issue. Who determines “value”?
Advisors often believe the burden is on them to justify their value. As you will see, this advisor took a very different approach.
The first meeting
I am taking some literary license to protect the confidentiality of the prospect.
He is a recently widowed man, who was retired from his position as a senior executive with a large conglomerate. He had three children and five grandchildren. His assets were more than $10 million and included substantial investments, including private equity, real estate and alternative investments.
In the initial meeting, the advisor followed the principles of The Solin Process℠. He started the meeting by asking what the prospect wanted to talk about. He listened intently and asked appropriate follow-up questions.
He made no effort to steer the conversation in any direction.
The prospect was unhappy with his current advisor who he thought was competent but lacked “communication skills.”
When he referenced that he felt overwhelmed by the complexity of his financial situation, the advisor made this inquiry: “Would you find it helpful to send your financial information to us so we could review it and discuss it with you in a second meeting?”
The prospect responded: “I would, but would I have an obligation to retain you? Because I’m not there yet.”
Here’s where the magic happened. The advisor responded: “We will spend as much time as you will give us, analyzing all your information and preparing an in-depth report, so that we both can determine if we’re a good fit.”
The prospect agreed and the meeting ended with his commitment to forward his information.
The second meeting
In the second meeting, the advisor began with this question: “How can I make this meeting as productive as possible for you?” This is right out of The Solin Process℠ playbook. It’s extremely effective. He could have assumed the prospect wanted him to present his report, but he didn’t.
The prospect indicated he was interested in the advisor’s views about his financial information.
The advisor could then have started with page one of a 20-page report he prepared, but he didn’t. Instead, he asked this question: “What aspects of your financial situation are of most concern to you?”
The prospect indicated his greatest concerns were leaving a sufficient legacy to his children and grandchildren.
The advisor asked a series of follow-up questions, probing for details.
This question clearly struck a chord: “In the ideal scenario, how much would you like to leave for each?”
It was apparent that the prospect never had quantified this amount. He responded with a number, prompting this further inquiry (which was critical): “Would you find it of value if we created a plan that demonstrated what would be involved in reaching that goal?”
When the prospect nodded affirmatively, the advisor indicated that he would do that.
As the hour neared, he asked this final question: “How would you like to proceed?” The prospect said he would like to review that plan and then decide, but he was “inclined” to move forward.
The advisor told me he sent a revised plan to the prospect, who then retained him.
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The takeaways
Here are the takeaways from this masterclass:
- The advisor listened intently and asked soft, open-ended questions.
- The advisor made no effort to persuade the prospect of anything.
- The advisor learned from the prospect what he regarded as being of “value,” rather than trying to justify his value or impose his views on what was valuable.
- The advisor demonstrated his value by putting in the time and effort to crunch the numbers and present a plan requested by the prospect.
- The advisor earned trust by risking the possibility the prospect would take his work and not retain him. I asked him how often that happened. He said: “Only a couple of times over the past 20 years.”
Dan trains executives and employees in the lessons based on the research on his latest book, Ask: How to Relate to Anyone. His online course, Ask: Increase Your Sales. Deepen Your Relationships, is currently available.
Read more articles by Dan Solin
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
