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The financial services industry competes on price. Unlike otherindustries like wireless, cable or credit cards with "introductoryrates," if part of your business has negotiable fees, that rate isoften set and forgotten.

Maybe you offer products with fees built in and a declaredinterest rate. One day, the word comes down  — newbusiness will be written at a lower rate. How do you talk fee orrate changes with clients?

Before we look at some ideas, let's review how some of yourclients might have originally gotten discounts.

Why do some people get discounts?

Good question. Here are eight reasons:

1. Competitive situation. You needed to cut prices to win theaccount.
2. Sharing the pain. The stock market tanked. They are losingmoney month after month. You cut fees to share the pain.
3. Firm strategy. We are going to increase market share bycompeting on price. When banks want new depositors, they wouldadvertise an attractive CD interest rate.
4. Client asked. They read an article: "Ask your broker for adiscount."
5. Friend sent them. The friend said: "Ask for the same discount Iget."
6. Inherited client. They got a discount from the last guy.
7. Cultural expectations. In Asia, no one expects to pay the listprice.
8. You like them. What's your policy? Is this the "familydiscount?"

Now, sell the increase to yourself

Return to the norm. In addition to the insurance side, part ofyour revenue might come from the investment side. There, the feesmight be negotiable. You competed to get business.

Time has passed: You've proven yourself. You have earned anadditional professional certification closely aligned with yourclient's needs. In the world of medicine, don't specialists getpaid more than generalists?

Time has passed: You've gained experience. At law firms, don'tpartners charge more than associates?

Nothing lasts forever: Your own health insurance likely has anannual rate reset.

Notifying your clients

What have we accomplished so far? We know why some people getdiscounts. You've convinced yourself there are reasons you deservea raise.

So how are you going to tell your clients?

1.Communicate directly. It's tempting to say:"Let sleeping dogs lie." When firms raise prices, it makes thenews. Magazines will write about it. Do you want someone elsebreaking the news to your client?

• Do: Own it. Pick up the phone. Tell them. Senda letter.
• Don't: Assume they won't notice. Who readsthose letters or opens their statement?

2. Give adequate lead time. If your credit cardcomes with a large annual fee, they usually let you know a month inadvance (assuming you read your statement). It's easier to opt outof something beforehand versus trying to get a fee reversedlater.

• Do: Provide advance notice. If theyhave alternatives, spell them out. Call or see them.
• Don't:  Tell them they needto make a decision this second or it's a done deal.

3. Explain the rationale. They might think youor the firm are simply being greedy.

• Do: Let them know where the firm has beenspending money. That new client facing website they are using. TheSmart phone app they like.
• Don't: Just assume they know rent and otherfixed expenses are rising for everybody.

4. You have history. The relationship you havedeveloped has value. To a degree, you are putting a price tag onit. Do: Remind them what you have done for them.You may have saved them money as well as made them money.Don't: Chicken out, blaming the firm."They made me do it." That weakens the relationship.

What would I put into a letter?

Remember letters? We still use them when we want to make animpact. Your firm likely sent them one. They might even havetemplates to help you write your own. If you feel like Shakespeareand want to put things in your own words, consider these ideas:(and get your letter approved by Compliance):

• Introduction: What's this letter about? Areinterest rates going down on new business written after a certaindate? Are managed account fees going up?
• Are there client benefits? What has improvedlately? Technology? Increase in staffing? How have these changeshelped clients? Relate improvements to paying for the costs.
• What happens next? Is there an incentive to domore business now before rates change on new business writtenlater? How and when will they see fee increases?
• Encourage them to get in touch: You want tohear from them. They may have questions. They may want tovent.
• Afterwards: Letters aren't "one anddone." What if they threw it out and forgot it? Forgot to telltheir spouse who adds up every column of numbers. What if theyforgot your conversation? Remind them, so they aren't surprisedwhen the new numbers come through.

Addressing concerns

Clients will call. Some won't be pleased. They might threaten toleave. Perhaps a competitor has undercut yourpricing (he's such a nice drinking buddy too!). Here'swhat you might think about as you prepare:

• Returning to the norm: If it's a discount yougranted, why are you bringing them back to the published pricing?You need good reasons.
• Stability of published prices at firm: Supposethe firm is raising prices. When was the last time they did it? Hasit been a long time? Clients will think of price increases fromtheir health insurance provider and property taxes. They seem to goup every year.
• What have you done for me lately? Now is thetime to blow your own horn. How have you added value?
• Broadband vs. Narrowband. They are upset overa price increase on one part of their total portfolio. How muchmoney have they invested with you? What's not changing? You adviseon everything, but prices are only increasing in one area.

Alternatives to increase revenue

This was a discount you originally granted the client. Theyaren't happy with "returning to the norm." They are ready to move.Do you have options?

Your objective is to do the best job you can for your client,but also to be adequately compensated. Two clients with similarasset levels might get the same high level of service, but one paysa lot less than the other.  Consider these factors:

• Breakpoints: Separately managed accounts(managed money) might have annual fees based on the amount of moneyinvested. A higher asset level means lower fees. Will they add moremoney to get a lower percentage fee?
• Unbundling: It works for the airlines. Youmight perform basic services for free. Do they need a morecomprehensive financial plan, the type with a fee attached?
• Share of wallet: You currently do businessacross only a segment of what your firm offers. Your client usesthose services too. Will they bring some of that business in house?Bankers often say: "The more you do, the cheaper it gets."

Telling clients about fee increases or deciding to remove adiscount you granted previously has the potential to be a trickyconversation. You can try and calm the situation by approachingpeople as you would prefer to be approached if you were in asimilar situation.

Bryce Sanders ispresident of Perceptive Business Solutions Inc. He provides HNWclient acquisition training for the financial services industry.His book, "Captivating the Wealthy Investor" can be foundon Amazon.

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