Why people will pay for service

It is easy to think the financial services industry is engaged in a race to the bottom when there are ads telling people they can trade stocks “for free.” This advertising appeals to DIY buyers, but it doesn’t appeal to everyone. Many people — especially those who are quality clients — are willing to pay more for a trusted financial advisor they can build an enduring relationship with.

Why should clients feel comfortable paying for financial advice? Here are a few reasons:

  1. It’s a relationship, not a transaction. The advisor and client work together to identify goals and work toward them. It’s a long-term relationship.
  2. Spot issues before they become problems. The financial advisor recommends rebalancing within the asset allocation. This is measured vs. a model specific to the client’s risk tolerance.
  3. How will clients get service when it’s needed? Clients who work with a financial advisor have a local point of contact. If they are not around, their assistant should be available. When a client calls with a problem, you and your team are there to resolve it.
  4. Who is looking after their interests? When clients shop online and find the lowest price, they’re buying from a provider who makes money on volume. As a result, service suffers. Financial advisors seek long-term relationships with clients. This is achieved by treating people well.
  5. Clients often want one-stop shopping. People will pay for convenience. If you can make it easy for them, convenience has value. A good advisor keeps their eyes on the big picture, getting in touch with clients when something needs attention. The client knows someone else (often the money manager) is driving the bus.

If people can get exactly the level of service and convenience they want, they will often pay for the privilege.

Bryce Sanders is president of Perceptive Business Solutions Inc. His book “Captivating the Wealthy Investor” is available on Amazon.

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