It never ceases to amaze me that so many advisors are so willing to discount their fees – no questions asked – as a regular course of business. PriceMetrix recently conducted a study of advisors across North America, and the findings are based on data which includes the books of 15,000 advisors, 2.3 million investors, one million fee-based accounts and more than $850 billion in assets. A few of the findings of the study include:

• Discounted management fees are taking an average of $20,000 a year out of the pockets of financial advisors
• The top 25% of advisors charge an average fee of 2.01% while those in the bottom quartile charge an average fee of 0.81%.

I find this last statistic very interesting indeed. To those who say that competition has increased and therefore fees must come down, I would counter with the question, do you want to be in the top 25% of advisors or the bottom quartile? Yes – competition has increased. But that does not necessarily mean that price is the only way to compete.

Successful advisors typically have the fee discussion with clients up-front, at the beginning of the conversation, as they describe their value-added proposition and unique perspective on the business. If the conversation is successful, discussions about discounts and quelled even before they begin. On the other hand, if the client brings up fees it’s probably too late.

The study also validates that point that once you have begun to discount, it’s very hard to end the precedent. According to PriceMetrix, only 5% of advisors increased their prices on existing fee-based account by more than 10 basis points in the years studied (2007-2010).

Few surgeons or attorneys to lower their fees – why should you? If you are confident in your ability to add value to your clients, then the fee discussion should be easy. In fact, turn the question around and ask the client “Would you want to do business with someone that has so little confidence in their ability to add value that they automatically offer a discount? If I help you define and reach your goals, the fee charged would be more than justified, wouldn’t it?”

Take control of the fee issue – and don’t discount you own worth! After all, if you don’t know your own value, you certainly can’t expect someone else to know it.

Click here to read our newest White Paper – Create a Buzz to Grow Your Business.

The perception is that the only way to become better known is to spend a lot of money hiring a public relations firm. The good news is that there are ways that you can act as your own publicist without spending a lot of money. In fact, the best publicity is often free, and easier to get than you might think.

The White Paper talks about some of the ways that you can create your own buzz now:

• Focus on a niche or target market
• Be proactive and promote yourself
• Be accessible and newsworthy
• Be “Social Media” visible
• Be Patient

The article was featured in our second quarter Unlocking Real Value Newsletter. Click here to see the complete newsletter, which also includes an exciting new Crisis Management program we have introduced via one of our strategic partnerships.

I hope that you enjoy the article and the newsletter.

Hardly a day goes by that I don’t read one study or another, or see a poll that indicates that the public level of confidence in the financial services industry remains very low. And usually the answer why is the same – a lack of trust. Trust is our equivalent to real estate’s Location, Location, Location. Its’ All About Trust, Trust, Trust – that’s it in a nutshell – that’s what matters to investors.

So if we all know that you have to gain an investors trust, why are so many in our industry having trouble either understanding this, or in gaining it? I read an interesting article recently that not only talked about trust between advisors and clients, but between advisors and the investment companies (e.g., mutual funds) that they work with. What was most interesting to me was that advisors are looking for the exact  same thing in the companies that they work with that clients look for in advisors.

So why the disconnect? Why are advisors in general able to articulate what they want from investment partners but unable to demonstrate the same traits to the people that they want to do business with them? Why can’t we as an industry gain the public’s trust?

First, lets look at the traits that are most important on the advisor side. They want firms they work with to be ethical, trustworthy and easy to business with. These traits are more important to them than cost. In addition, many advisors seem to be reducing the number of firms that they are working with in order to be able to do a better job of due diligence – they want to work with a smaller number of partners who they know well and can trust.

Hmmm – sounds familiar? That’s exactly what clients want – they don’t want to have a lot of advisors – they want someone that is ethical, that they can trust and that is easy to work with.

So where is the disconnect – why can’t many advisors demonstrate to their clients that they are ethical, trustworthy and easy to do business with?

Much has to do with the fact that clients don’t understand what the advisor is really offering – what the “brand” is. If an advisor doesn’t effectively articulate what his value-added proposition is and what makes him different – and better – than the competition, then naturally the client will focus on either price or product – and inevitably not be happy.

The clients of successful advisors can tell you why they do business with their advisor. So, maybe, if your’e an advisor, you should ask the question – the answer might help you reposition or redefine your message. Ask yourself the question, ask your clients the question. In fact, just by asking clients the question, and showing clients that you trust and value their opinion, you are probably starting to increase trust!

Its All About Trust, Trust, Trust.

A Mission Statement – a short statement of a company’s purpose – is an important part of your brand (or corporate identity). It helps distinguish you from the competition by articulating your value-added proposition in an intriguing and engaging way. A good Mission Statement makes the reader want to read more about you and your services.

It should be short – especially if people see it for the first time on your website – because if it isn’t, people won’t read it. As in your elevator speech – if you can’t articulate your value succinctly – it’s time to go back to the drawing board!

Having said that, there are three additional important components of a good Mission Statement:

1) It should clearly define the product and/or service that you provide;

2) It should clearly define who the target audience for your product and/or service is; and

3) It should contain a measurement metric so that you can evaluate its effectiveness.

It might sound daunting to accomplish these goals in a short statement, but it’s definitely possible. To view some samples of Mission Statements please click here. Slides 5-6 of this presentation provide general examples as well as a few specific ones from the financial services industry. (Contact me if you want to know the companies whose Mission Statements are listed on slide 5.)

Send me a draft of your Mission Statement and I’ll give you my two cents.