Latest / The Efficient Advisor: Tactical Business Advice for Financial Planners / 153: Ideas to Implement - Free to Fee—How to Start Charging for Planning, Even in a BD World

Transcript

153: Ideas to Implement - Free to Fee—How to Start Charging for Planning, Even in a BD World · The Efficient Advisor: Tactical Business Advice for Financial Planners

• 0:00
  Speaker 1: Hey gang, welcome back.
• 0:01
  Speaker 1: I'm so, so glad you're here.
• 0:03
  Speaker 1: Every week I try to create a follow-up episode that is short, sweet and all about the action steps and kind of a synopsis of this week's longer podcast.
• 0:13
  Speaker 1: So every week I'm going to try to distill down into just a couple of bullet points the items that I want you to act on immediately to make a big impact in your business.
• 0:24
  Speaker 1: I am your host of the efficient advisor, libby Greilwe, and I built from scratch and sold a 100% referral only planning practice that I grew to seven figures as a solo advisor, all while working just three days a week and taking off 14 weeks a year to lean into being a mom, a wife, a friend, a daughter, a sister and, frankly, a travel obsessed human.
• 0:46
  Speaker 1: And did I mention an auntie?
• 0:47
  Speaker 1: I'm a really good aunt.
• 0:48
  Speaker 1: Anyway, I'm here to walk alongside you, to show you how to do exactly the same thing in your own business and to help you take the immediate actions you need for the most important strategies to scale, organize and create less stress and overwhelm in your financial advisory practice.
• 1:03
  Speaker 1: We are about to transform your business, so move over exhaustion and advisor ADD.
• 1:09
  Speaker 1: It is time to take that one right next step to build a business and a life that you love.
• 1:16
  Speaker 1: So this week's episode was free to fee.
• 1:20
  Speaker 1: You know how to start charging for planning, even if you live in a broker dealer world, and I had my super special guest, brian Janssen, on, who is a dear friend from my previous broker dealer, who has just done an exceptional job taking a mature planning business from doing free planning and then, you know, for decade plus right, doing free planning, proving value, feeling like I had to demonstrate value first, and this was kind of a similar journey that we went on in my business too.
• 1:51
  Speaker 1: But Brian has just done an exceptional job and he did such a great job articulating.
• 1:55
  Speaker 1: You know how he overcame objections.
• 1:58
  Speaker 1: You know how he overcame that imposter syndrome.
• 2:01
  Speaker 1: You know how he priced his offer, how he converted existing clients who had never, ever paid for services before, how he spoke to prospects who had never, ever paid for services before and sort of what's the difference between year one and year two?
• 2:15
  Speaker 1: Do we consider price drops?
• 2:16
  Speaker 1: The answer is no, and I know.
• 2:19
  Speaker 1: For me, when I made the shift inside of my own business, I felt all the things.
• 2:24
  Speaker 1: So the big takeaways for me with this conversation with Brian, we're really number one understanding this idea of what he called profitability adjusted burn rate and really how he used that to start charging a fee and to identify the fee.
• 2:39
  Speaker 1: I thought that was a really interesting way of looking at it.
• 2:43
  Speaker 1: Right Is really understanding, and we've talked about in previous episodes using profitability KPIs as opposed to just looking at revenue as a KPI or key performance indicator, and Brian was like tracking totally with how I think and feel, but I love the way that he talked about it.
• 2:59
  Speaker 1: I love the way that he phrased it, this profitability adjusted.
• 3:02
  Speaker 1: So really understanding.
• 3:04
  Speaker 1: What is your burn rate?
• 3:05
  Speaker 1: How much is it actually costing for you to operate your business on an hourly basis?
• 3:09
  Speaker 1: What does it cost for you to pay your team for your rent, for your technology fees, for your licensing, all the things, and then using that as a basis to build out your pricing structure.
• 3:23
  Speaker 1: Now, in my own practice, we started charging a super low fee when we started charging for planning right, mainly because of my head trash, my imposter syndrome around it and my thought initially, and there's really no right way to do this.
• 3:36
  Speaker 1: There's lots of different ways to price your offer, but one of the ways that we did it initially was you know what?
• 3:41
  Speaker 1: Let's just charge something to separate the cream from the milk, right?
• 3:45
  Speaker 1: Let's get the people who are willing to pay something for professional services and there's a higher likelihood, if they've paid for something, that they're going to implement the recommendations from it.
• 3:58
  Speaker 1: And we knew it was a loss leader in our business.
• 4:01
  Speaker 1: But quickly, over time, we recognized okay, yes, while we do get paid much, much more on the implementation side, we, like Brian mentioned in the episode, the thing isn't the plan right.
• 4:13
  Speaker 1: I didn't want people to feel like they were paying for the financial plan.
• 4:16
  Speaker 1: I wanted them to feel like they were paying for the ongoing planning that we were doing them.
• 4:22
  Speaker 1: And the way that Brian phrased this was the thing isn't the plan right.
• 4:26
  Speaker 1: They're not paying a fee for the actual output and recommendations.
• 4:31
  Speaker 1: They are paying a fee for the ongoing relationship and I thought that was really impactful.
• 4:39
  Speaker 1: And the final bullet point I wanted to point out was Brian's language around this idea of hey, it's just not worth it anymore, and how to have conversations with clients when their budget gets tight, when the market is down, when pandemics and crazy things happen.
• 4:56
  Speaker 1: Lord willing, that will never happen again but when things come up, how do you have language around clients who are wanting to stop their subscription or kind of questioning the value of the ongoing planning?
• 5:08
  Speaker 1: And I love this way that he language it around like, hey, if you don't think that this relationship is worth it anymore, then I don't want you to be doing that planning and kind of putting it on them in their plate and giving them the ability to say it's worth it, it's not worth it, versus trying to I don't know, trying to like articulate your value and trying to, I mean, and you and you're going to want to do some of that, but you know what, at the end of the day, you want to be in relationship with your clients.
• 5:35
  Speaker 1: You want to work with clients who bring you joy and are engaged in the type of planning and need the type of planning that you have fun doing.
• 5:46
  Speaker 1: It's all that ideal client avatar work that we talk about here at the Efficient Advisor.
• 5:50
  Speaker 1: You know, in our small group coaching program we just went through this ideal client avatar work, probably about a month, month and a half ago now, and it's so helpful to know the type of planning that you do that is profitable for clients, that you love, that you have fun doing in the type of planning that you feel like you're adding lots and lots of value to your clients and having a big impact.
• 6:16
  Speaker 1: Okay, and I know that I said that was the last bullet point, but I want to highlight one more thing, one more thing that Brian and I talked about in this episode and I was curious to get his opinion on, as I hear from advisors all the time hey, I want to charge less in your.
• 6:28
  Speaker 1: I feel like I need to charge more in year one and less in year two, because year two doesn't require as much effort, right, year one is getting all the statements and putting all the stuff in the software and doing all the initial analysis and initial recommendations and it's so much more time consuming and it's so much harder.
• 6:43
  Speaker 1: And then I'm going to drop the fee in year two.
• 6:45
  Speaker 1: And I asked Brian what his opinion on was on that was and he was like yes, this is when he brought up like the thing isn't the plan, they're paying for the relationship and the relationship isn't going to change in year two.
• 6:55
  Speaker 1: The other thing with that, in my opinion, is it devalues the planning that you're doing by immediately saying like, hey, year two, it's not worth as much as your one.
• 7:08
  Speaker 1: I feel like you're automatically positioning yourself for a relationship that looks like a time for money situation, as opposed to being on a retainer or being on an annual amount.
• 7:22
  Speaker 1: That's the same.
• 7:23
  Speaker 1: Exactly to Brian's point, the thing isn't the plan.
• 7:26
  Speaker 1: They are not paying for the plan.
• 7:29
  Speaker 1: They are paying you fee for the ongoing relationship, the access to you, the advice that you're providing and, if you're working in themes, right, your detailed to themes, your attention that you're paying to certain parts or certain tenants of financial planning year over year on an in-depth basis.
• 7:44
  Speaker 1: So, anyways, I hope you guys found this episode super helpful.
• 7:49
  Speaker 1: I've got the KPI episode linked in the show notes and all of Brian's contact information, so if you want to connect over with him over on LinkedIn, I'm sure he would love that.
• 8:00
  Speaker 1: Thank you guys so much and I hope you have an amazing rest of your week.