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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:
- Competitive situation. You needed to cut prices to win the account.
- Sharing the pain. The stock market tanked. They are losing money month after month. You cut fees to share the pain.
- 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.
- Client asked. They read an article: "Ask your broker for a discount."
- Friend sent them. The friend said: "Ask for the same discount I get."
- Inherited client. They got a discount from the last guy.
- Cultural expectations. In Asia, no one expects to pay the list price.
- 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.
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Bryce Sanders
Bryce Sanders, president of Perceptive Business Solutions Inc., has provided training for the financial services industry on high-net-worth client acquisition since 2001. He trains financial professionals on how to identify prospects within the wealthiest 2%-5% of their market, where to meet and socialize with them, how to talk with wealthy people and develop personal relationships, and how to transform wealthy friends into clients. Bryce spent 14 years with a major financial services firm as a successful financial advisor, two years as a district sales manager and four years as a home office manager. He developed personal relationships within the HNW community through his past involvement as a Trustee of the James A. Michener Art Museum, Board of Associates for the Bucks County Chapter of the Fox Chase Cancer Center, Board of Trustees for Stevens Institute of Technology and as a church lector. Bryce has been published in American City Business Journals, Barrons, InsuranceNewsNet, BenefitsPro, The Register, MDRT Round the Table, MDRT Blog, accountingweb.com, Advisorpedia and Horsesmouth.com. In Canada, his articles have appeared in Wealth Professional. He is the author of the book “Captivating the Wealthy Investor.”
