Lance Armstrong, the now disgraced cyclist who was stripped of his seven Tour de France wins, titled his autobiography, It’s Not About the Bike. His book was published at the peak of his career and documented his extraordinary recovery from cancer and his remarkable return to the peak of cycling.
In a tell-all interview, he admitted to Oprah Winfrey that in fact he had taken performance-enhancing drugs throughout his cycling career, despite his repeated denials and protestations of innocence. We now understand why it wasn’t about the bike. It was about the drugs that enhanced his already amazing athletic ability.
Despite Armstrong’s illegal attempts to boost his performance, it would be tough to argue that he doubted his value as an athlete. In fact, in his Oprah interview he said that he did not believe one could win the Tour de France without cheating in the way he had. If ever someone believed that they were worth every cent of their financial success, it was Lance Armstrong. Self-belief in his own value is the lesson that I believe Lance provides to financial planners.
Self-belief in his own value is the lesson that I believe Lance provides to financial planners.
In my recent work with a wide range of financial planners the issue of fees is increasingly raised as a critical issue. Financial planners are struggling with how they charge fees for their work.
And in this grappling, the conversations I have with them tend to focus on the mechanics of fee payment. “My clients won’t want to do an EFT every month or set up a debit order to pay me,” is a common refrain. So too is the one, “Clients have never had to pay for financial advice, so they are not going to start now.” As we know this is a self-delusional excuse.
Clients do pay for their advice; it is just that many are unaware they are doing so — they think they are paying for a product. The most common lament I hear from financial planners is, “The industry needs to set the standard so that the client understands that paying fees is the norm. If I start charging fees now, the client will just move to someone who doesn’t charge fees.” Just to confirm, clients do and always have paid fees, even though it may be called commission. You’re not “starting” to charge fees, you always have.
Just as Armstrong said, “It’s not about the bike”, so too for financial planners, “It’s not about the fees”. What brought this home to me again recently was the story a financial planner shared about their frustration with a potential client they lost. “I had three very good meetings with the client, I helped them understand their situation and told them what I thought they should do. They said thank you very much and went and implemented my advice with…”
In this case the client went to a big blue institution, but it could easily have been with another advisor, or even by themselves. This financial planner had spent valuable time in three meetings, applied their mind to the client’s situation, done some research outside of those meetings, and yet got no recognition of the value they had added other than a “thank you”. There had been no talk of fees. But more importantly there had been no talk of what value the planner will be adding to the client. And here’s the thing. It’s not about the fees, it’s about the value.
It’s not about the fees, it’s about the value.
If you don’t, like Lance Armstrong, believe in your own value, then the discussion about fees is a red herring. When I go to see my doctor, I don’t even think about the fact that I have to pay him. Even for 15 minutes of his time, whether in person or on the phone. I have no doubt in the value that the doctor is going to offer me in that time, even though he may give me the wrong advice. He may misdiagnose me or may prescribe the wrong medication. But I will stay pay him for his advice. Note, I said advice. Not time. Because when a client comes to see you, they are not paying for your time.
Pablo Picasso, at the height of his fame and influence as an artist, was asked by a fan to sketch something for him. This happened when Picasso was out for dinner at a restaurant. The fan gave Picasso a napkin to sketch on and said he would pay for the sketch. In fact, he supposedly said to Picasso, “Name your price.” Picasso took a charcoal pencil from his pocket and quickly drew the image of a goat. He then said to the fan, “That’ll be $100 000.” The fan was astounded, saying, “But that only took you 30 seconds to draw.” Picasso then crumpled up the napkin and stuffed it into his jacket pocket. “You are wrong,” he said. “It took me 40 years.”
This story is a challenging reminder that clients are paying for your experience, expertise, insights and ability to connect with them and “diagnose” what they need. As we saw in the story of the client who went to the big blue, the advisor had three meetings to be in a position to complete her diagnosis and share her insights and advice. The advisor gave the client time, effort, experience and expertise, for free.
This approach to financial planning is a legacy of the sales industry from which the financial planning profession was born. A salesperson is happy to put in effort in the hope of making a sale and understands that not all effort results in a sale. Professionals know their value and don’t hesitate to charge for their value. Salespeople adapt what they have to offer a client depending on the situation, the professional financial planner is consistent about the value they offer.
Until you recognise that when you meet with a client you are adding value and should be charging for that value, then it is not about the fees, it is about your perception of the value you add as a professional.
If financial planners are to be true professionals then every time a client meets with you, they should know that it’s going to cost them. The same way they know this to be true if they sit with a doctor, lawyer or accountant.
The discussion on fees tends to be caught up in the mechanics of how fees will be charged and paid. This is an important topic for another article.
Until you recognise that when you meet with a client you are adding value and should be charging for that value, then it is not about the fees, it is about your perception of the value you add as a professional.
Former FPI Financial Planner of the Year Wouter Fourie, will be talking about how to position your fees with clients at this year’s Humans Under Management virtual conference on 15 September 2021. For more information and to buy tickets, go to:
www.humansundermanagement.com/southafrica2021
