Determining fees for the upcoming fiduciary rule

The U.S. Department of Labor fiduciary rule will result in many advisors adjusting from a commission-based business to a fee-based practice. Juli McNeely, CFP, CLU, of Spencer, Wisconsin, has started making that transition with clients and offers this guidance:

“I tend to serve middle-income consumers, so if I come to them and say, ‘I’m going to charge you $5,000 a year to give you advice,’ I don’t know how many clients I’d have continue to work with me. But I can come to them and say, ‘Hey, we’re going to spend a lot of extra time really working on this plan, and because of that, we’re going to charge a fee to do that, but we think it’s going to give you this, this and this.’ They completely embrace that. So that’s the first step we’ve taken, is to begin charging flat fees for pieces of advice, which feels very comfortable for me to ask. And I think the next step then would be to charge a fee for managing the accounts that we currently manage.

“As I’ve slowly started to move in this arena and started to talk to clients about it, I’m astounded by the number of them that are getting their check out and writing me a check for a financial plan, where in the past I didn’t ask for that fee. So I’m beginning to understand that this is just noise in my own head and not truly an obstacle clients will need to face. If you can get past what’s going on in your head, I think it will be a much easier process.”

Listen to more insights about complying with the DOL fiduciary rule in the third installment of the three-episode series of the MDRT Podcast about the DOL regulation.

This example is for educational and information purposes only. Each professional should set his own terms and conditions of engagement with the client through the process of negotiation.

Written by Matt Pais, MDRT Content Specialist