The FVP — The Fee Value Proposition

Communicating fees to clients and prospects challenges many advisors. After an interesting LinkedIn exchange about fees with advisor Richard Rosso, I asked him to turn his comments into a blog post. I hope you’ll continue the conversation in the “Comments” or on social media.

The FVP – The Fee Value Proposition
By Richard Rosso, MS, CIMA®, CFP®

If you ask a sample of advisors how they created their fee schedules and positioned them to the public, you’ll hear many different responses. Clients are sensitive to our fees – even more so after the financial crisis of 2008. According to a recent study conducted by Invesco Ltd, surprisingly, the word “fees” drew twice the rate of negative responses compared to the word “commissions,” when investors were surveyed.

I have four suggestions for communicating to prospects and clients the value of your fees.

1. Convince yourself. If you’re not truly convinced the partnership, guidance, and  relationship you provide are worth what you charge, you can’t passionately and straightforwardly converse about your fee structure with others. Each week, I write down three ways I’ve earned my fee, usually on a client-specific basis. I’m very tough on myself, too. I then input notes in Redtail (our CRM provider) so I may follow up on an issue or concern when a client least expects it. The key is to delight my clients so they appreciate what I offer.

2. Value first, fees last.  At times, I’ll be asked about fees even before I’ve had a chance to understand what a prospective client is seeking in a financial partner or if there’s even a fit. With those who are “fee obsessed,” it’s best to acknowledge the question – don’t avoid it. Then state how you will clearly explain fees once you have gained a better grasp on what’s important. Focus on open-ended questions and provide specifics regarding value you can provide. Frankly, prospects who begin with “fees first” are not a good fit most of the time.

3. Convert strengths into differentiators. Create a strong, clear value proposition. In his book, Stop Asking for Referrals, Stephen Wershing, CFP®, writes of converting strengths into differentiators through “Measure, Manage, Master,” which is what I practice. Don’t try to reinvent the wheel, just make sure your wheel has strong treads and gains traction when it counts.

It’s one thing to say you provide “good service.” It’s another level entirely to outline specific service objectives. Written standards are measured, managed (to make sure they’re followed) and mastered by responsible parties.

Our creation of an overarching, eleven-rule list of client deliverables, titled “The Vision Prism,” to complement our two levels of standards, reflects accountability to those we serve. Everyone at the firm must commit to The Vision Prism and sign the written promise. It’s clear: If you can’t commit, you can’t be part of the team.

Clients receive copies of our standards and are encouraged to hold us accountable. It’s one thing to say “you return phone calls quickly.” It’s another to place in writing “you will receive a returned phone call within three hours” and stick to that mandate. That’s how you justify fees charged.

4. Watch your language. Your words and delivery are important. If you don’t believe in your fee schedule, it’ll come through in your voice. If you can indeed deliver on your promises, then be confident. Also, I like to use the word “investment” when describing a fee. The fee is a client’s investment in the relationship, answers to planning questions, proactive communication of relevant issues, avoidance of behavioral pitfalls and financial education for them and their family members.

Try to keep it simple. Our fee is a percentage of assets under management charged quarterly. That’s it. We get paid by the client.

Investors are seeking greater value from their advisers along with a clear understanding of services provided.

No matter how you decide to structure fees for your advisory firm, what’s important is the message, the transparency and the value behind the numbers.


Richard Rosso is Senior Financial Adviser for Clarityfinancial, LLC based out of Houston, Texas. He is the author of the book Random Thoughts of a Money Muse, a cutting-edge, pop-culture and sometimes funny look at money and the real story behind financial dogma.

2 replies
  1. Suman Arora
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