We are much more competent in managing wealth responsibly than most of our clients. You better believe that - and be confident enough to charge a fee for it. If you don't, you - not the client - are creating the problem. By Kees Stoute
To promote their brand, most wealth management firms design the most appealing advertisements.
It is common to see images such as an elderly man on a luxury yacht with his bright young son, both decorated with a beatific smile on their face. They are obviously free from any trouble. Why are they so intensely happy? Their holistic wealth manager has just taken all their worries away and now they can experience the ultimate peace of mind.
Any family that is this content with the contributions of their wealth manager to the quality of their lives, would surely be more than pleased to pay a decent fee for the services provided.
In this context, I wonder why I still hear so often that wealth managers are scared to lose revenues once their costs become fully transparent to their clients.
Does the family in the advertisement look so happy because they think that their financial peace of mind was given to them free of charge? Would they really be outraged once they realise that you actually earn a living from making them this happy? Not likely, isn’t it?
Conviction in your value-add
We are a profession. Professionals typically charge a fee for applying their superior knowledge and experience to their clients’ situations. Why would we be any different?
The life of the rich is fraught with ‘risks’: uncertain and volatile markets, health, (family) conflicts, divorce, wealth and business succession issues, security concerns, ‘do I have enough?’ questions, etc. Wealth management professionals typically have the knowledge and experience to manage these risks.
We may not be able to avoid these risks, but by anticipating them, we can help to minimise the impact on our clients’ lives and emotions.
Most wealthy individuals simply don’t have the time, knowledge or experience to manage their own wealth well.
It would be tragic if we – as wealth management practitioners – don’t believe or feel confident that we have the ability to help our clients handle the typical rich-man’s challenges and anxieties.
Most practitioners who complain that clients don’t like paying for advice, have in fact never really tried this approach.
Most of them are simply using their clients as an excuse for drumming the same product-sales beat.
They continue to spend most of their time looking for that unique investment opportunity that may outperform all other ideas. Once they manage to sell their product, the praying begins: “Let’s hope that the market will be benign and do what it needs to do to make my advice – and me – an outstanding success.”
As the advertisements suggest – although usually in a somewhat exaggerated fashion – we are able as a profession to add true value to the lives of our clients.
For applying our knowledge in our respective areas of competence (for example, investments, credits, structuring, insurance, etc) and with the intention to improve the quality of the lives of our clients, we should charge a fee. And do it proudly.