Charging Too Little? Ask Your Clients
Advisors often ask how to address the problem of overservicing their clients. It usually comes up in a conversation about wanting to increase or start charging fees or to curtail the amount of time an advisor works on an individual client. The question sounds something like this: "We know we overservice clients, so how can we bring our fees in line with what they should be?"
But no client thinks they should get less service from you and thus no advisor overservices his clients. It cannot be done.
It could be that you provide more service or address more issues than other advisors in your area.
Or it could be that you intend to provide a certain number of hours of planning to clients at different fee levels and then ignore your own guidelines and invest more hours without charging anything extra.
It could be that you simply ignore how much time you spend on any individual client until you are doing so much service and planning work for clients that you cannot handle the workload and do not have enough revenue to hire another planner or staff member.
Whatever the reason for the disconnect, the issue is not that you overservice your clients. The problem is that the amount of service you provide is not supported by your business model or management system.
I have seen many advisors attempt to provide Neiman Marcus service at a K-Mart price. It doesnt work. But thats not overservicing. It's undercharging.
The way you frame the issue matters because it influences how you will present it to clients. If you frame the conversation with some version of "you are getting more than you deserve," it will be hard to find some way of addressing the issue that doesn't make clients feel bad or damage your relationship.
But clients want you to succeed and are willing to help and advisors should tap into that. Rather than thinking about "the problem of overservicing our clients," present the facts and get their guidance, enlisting them as advisors to your business.
You could say, for example, "We pride ourselves on how much service we provide and we find ourselves in a pickle. We have as much staff as we can afford and they cannot keep up with all the things clients ask of us. We are concerned that some clients may not get what they should. Could we get your advice on how we might address this?"
You might be surprised at what I have heard some clients come up with. Many have indicated that if they are receiving a valuable service they would expect to pay for it. Some have recommended that advisors begin charging for certain services. And while clients may not always be willing to pay over a certain amount for some services, they understand that you run a business and have to balance your revenues and expenses.
In engaging clients in a discussion about services and fees you may learn that clients do not value some of the things you do and that you might decide to decrease or eliminate them. You may find that clients are willing to pay more than they do currently for other services.
Whatever you learn, you can have a productive conversation with clients about how to tailor the nature and level of services and the fees you charge them. It just cant start from the assumption that you are "overservicing" them.
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