Admit it, we all want to get something for nothing.  We live in a world where we shop at Target, scan an item and see if we can get it for less on Amazon.  We want to value going to the local, small business to purchase a toy for a birthday party, but the reality is we are frustrated that they need to charge $5 more because the mom and pop shop does not have the buying power that Target and Amazon do.  We hope that our clients value our advice, but the reality is they feel the same way that we do, they want to pay as little as possible.

In a low cost, high-value world, how can you compete?  Previously, you charged clients 1-2% to do asset allocation.  However, your clients are watching a football game and see you-know-who saying they have no fees and they also want you to have no fees to transfer their assets.  Your firm is never going to have the amount of assets under management that Vanguard, Fidelity, and the other guys with commercials during football games do.  So, if your clients are asking for low-cost investments, what is your next step?

My wife and I have been together for nearly 15 years, she has seen my business struggle and thrive.  She always says that things are best for my business when the economy is not great.  When the markets are up, clients happily go invest in these low-cost investments and their portfolios go up.  But, when the markets go down, they realize just how important our expertise is. 

So, you can’t compete with low-cost investments, especially when the market is thriving.  Nevertheless, you enjoy what you do and have great advice.  Yet, you need to pay your office staff, bills and eat!  Instead of charging fees to move assets or obtain new assets, it’s time to adopt a retainer-based model where you will charge clients an upfront fee (retainer) to give them advice.  Yes, they may in time move assets under your management, but for now, you will develop a plan for them and help guide them.

For more information about becoming a retainer-based financial advisor click here.

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