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The financial services industry competes on price. Unlike other industries like wireless, cable or credit cards with "introductory rates," if part of your business has negotiable fees, that rate is often set and forgotten.

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

Before we look at some ideas, let's review how some of your clients 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 the account.
2. Sharing the pain. The stock market tanked. They are losing money month after month. You cut fees to share the pain.
3. Firm strategy. We are going to increase market share by competing on price. When banks want new depositors, they would advertise an attractive CD interest rate.
4. Client asked. They read an article: "Ask your broker for a discount."
5. Friend sent them. The friend said: "Ask for the same discount I get."
6. Inherited client. They got a discount from the last guy.
7. Cultural expectations. In Asia, no one expects to pay the list price.
8. You like them. What's your policy? Is this the "family discount?"

Now, sell the increase to yourself

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

Time has passed: You've proven yourself. You have earned an additional professional certification closely aligned with your client's needs. In the world of medicine, don't specialists get paid more than generalists?

Time has passed: You've gained experience. At law firms, don't partners charge more than associates?

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

Notifying your clients

What have we accomplished so far? We know why some people get discounts. You've convinced yourself there are reasons you deserve a 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 the news. Magazines will write about it. Do you want someone else breaking the news to your client?

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

2. Give adequate lead time. If your credit card comes with a large annual fee, they usually let you know a month in advance (assuming you read your statement). It's easier to opt out of something beforehand versus trying to get a fee reversed later.

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

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

• Do: Let them know where the firm has been spending money. That new client facing website they are using. The Smart phone app they like.
• Don't: Just assume they know rent and other fixed expenses are rising for everybody.

4. You have history. The relationship you have developed has value. To a degree, you are putting a price tag on it. 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 an impact. Your firm likely sent them one. They might even have templates to help you write your own. If you feel like Shakespeare and want to put things in your own words, consider these ideas: (and get your letter approved by Compliance):

• Introduction: What's this letter about? Are interest rates going down on new business written after a certain date? Are managed account fees going up?
• Are there client benefits? What has improved lately? Technology? Increase in staffing? How have these changes helped clients? Relate improvements to paying for the costs.
• What happens next? Is there an incentive to do more business now before rates change on new business written later? How and when will they see fee increases?
• Encourage them to get in touch: You want to hear from them. They may have questions. They may want to vent.
• Afterwards: Letters aren't "one and done." What if they threw it out and forgot it? Forgot to tell their spouse who adds up every column of numbers. What if they forgot your conversation? Remind them, so they aren't surprised when the new numbers come through.

Addressing concerns

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

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

Alternatives to increase revenue

This was a discount you originally granted the client. They aren'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 similar asset levels might get the same high level of service, but one pays a lot less than the other.  Consider these factors:

• Breakpoints: Separately managed accounts (managed money) might have annual fees based on the amount of money invested. A higher asset level means lower fees. Will they add more money to get a lower percentage fee?
• Unbundling: It works for the airlines. You might perform basic services for free. Do they need a more comprehensive financial plan, the type with a fee attached?
• Share of wallet: You currently do business across only a segment of what your firm offers. Your client uses those 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 a discount you granted previously has the potential to be a tricky conversation. You can try and calm the situation by approaching people as you would prefer to be approached if you were in a similar situation.

Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, "Captivating the Wealthy Investor" can be found on Amazon.

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