All advisors and practice owners feel fear at some point. It’s a natural part of growing your practice. And unless you are completely certain of the value you are providing to your clients, it can be uncomfortable discussing your fees and articulating your fee structure. But if you downplay your fees or make excuses for them, you’re far more likely to be asked for a discount. So, in this episode, Micah and Matthew will be sharing how to get rid of the head trash surrounding your prices so you can finally ask for the fee you’re worth without any stress.
Listen in as they explain the importance of understanding your specialty and having a system for when friends or family ask for financial advice. You will learn what to do when someone pushes back on your prices, why conviction is essential for being a great advisor, and the benefit of having a written fee structure to hand out.
We hear all of the time being in the RIA space is lonely. It is hard to find like-minded individuals who want to help you to achieve success. And most likely, you often ask yourself the same question (we all do) – Where do I start? The TPR’s Starter Kit offers you access to the One Page Financial Plan, 5 Mistakes Keeping You From Getting More Clients & How to Stop Playing Office, our most popular power sessions of all time!
Is making exceptions to your fee schedule hurting your ability to provide value?
As a financial advisor, you’re prepared for almost any question. But are you prepared for the worst question of all: “Can I have a discount?”
In this article, you’ll learn why making exceptions to your fee schedule sells yourself and your top clients short, how to clear your head trash around charging appropriately, and why it’s so important to know your own value.
When someone tells you they can’t afford your services, it’s hard not to want to help them. That’s just human nature. But is accepting a new client at a discounted rate really the best way to help?
Consider the latest iPhone. Nearly a thousand dollars is a lot of money for what is essentially a second computer in your pocket. But iPhones were never meant to be the solution for every consumer—just those who agree that its value is worth the cost. For the rest, many other phones exist across different price points. Giving discounts to everyone who wants one isn’t how businesses work, and it’s not how you ensure your ability to continue serving your clients.
Think of your financial practice like the most premium smartphone out there. It has a great deal of value; you can’t just pretend it doesn’t by offering it at a lower cost. If a prospect just isn’t right for you, putting them in touch with the right solution for their needs instead is the moral thing to do (not to mention a great opportunity to connect with your centers of influence).
For many advisors just starting out, conversations related to fee structure can feel awkward. This is understandable: in a professional service, there are no incremental “cost of goods” to act as a pricing metric, and until you gain more industry experience, it isn’t always clear where you stand among your competitors.
But high-level advisors know you don’t reach the top by competing on fees; you do it by providing the highest value to the clients you serve best. When a client asks you about your fees or requests a discount, it’s important that you know exactly how to respond—and that your answer is as natural as saying your own name.
In the rare cases that you do face pushback about your fee structure, that pushback will likely come from friends of people in your own network. Naturally, that personal connection makes refusing this request even more difficult. That’s why it’s so important to develop a plan in advance for dealing with questions about your fees.
Matthew Jarvis and Micah Shilanski, cohosts of The Perfect RIA podcast, have completely different fee structures, but they both run high-level practices. And to maintain that success, they both rely on strong systems they’ve developed to appropriately handle any situation. For Micah’s office, that means anyone who wants an hour of his time is charged the same prospect meeting fee as anyone else. If family and friends aren’t the right fit, then Micah isn’t the right person to give them advice.
On the other hand, Matthew’s office doesn’t charge a fee for meeting with qualified prospects. When a prospect isn’t a good fit, he explains why he can’t meet with them using a simple but accurate analogy: “I’m like a knee surgeon. I only do knee surgery. What you need is a cardiologist, and I’d be glad to refer you to a cardiologist I trust to do a great job for you.” Whatever your fee structure and onboarding process, develop a simple but effective explanation that you’re comfortable using with every potential client, and practice it until it’s perfect.
If you’re charging premium rates but you don’t quite feel like you’re living up to them, ask yourself where that feeling is coming from. Are you really the very best solution out there for clients just like yours? And if you’re not, what do you need to do—or which clients do you need to focus more narrowly on—to ensure that you are their very best solution?
When you’ve taken every opportunity you can to deliver massive value, reassess everything clients receive in return for your fees. If you can’t justify your own value to yourself, you’ll never be able to justify it to a client. But if what you offer is well worth the asking price of doing business with you, banish that headtrash forever and move forward with confidence in your fees.
It’s one thing to promise yourself no more exceptions to your fee structure, but it’s another to hold firm in the face of family, friends, and acquaintances. When emotional entanglements make it difficult to say no, you need a strategy for staying committed and sticking to your systems.
When a loss is only theoretical—such as allowing a new client to take up your once-valuable time at a lower rate than other clients—these exceptions can be easy to rationalize. If you find yourself continually straying from your system, make a deal with yourself that you’ll fire your top client for every exception you make, then find an accountability partner to help you stick to your commitment. Those exceptions won’t be so easy to rationalize when they start causing you immediate pain.
“That, by the way, is not a fictitious example,” Matthew warns. “We’ve set that up with multiple advisors. ‘Perfect—every time you take a person below your minimum or give a person a discount, just fire your top client because you’re not delivering massive value to them by taking on these non-ideal clients. Not a big deal. Take as many as you’d like.’”
If that feels like no way to run a business, you’re exactly right. With a fee schedule that reflects what your service is worth and safeguards in place to keep you on track, you’ll be well on your way to a sustainable business that will deliver massive value for years to come.
You do not have to be the sole solution to every person's financial problems. – @ThePerfectRIA Share on X
Create a system for success. – @ThePerfectRIA Share on X
You have to find a script that works for you. – @ThePerfectRIA Share on X
This is The Perfect RIA, in case you didn’t know. Bringing you all the strategies to help your business grow. Are you happy? Are you satisfied? Are you hanging on the edge of your seat? Sit back and listen in while you feel the beat. Another myth bites the dust…
Matthew Jarvis: Hello, everyone, and welcome to another episode of The Perfect RIA podcast. I’m your co-host and co-founder, Matthew Jarvis, and with me, the man, the myth, the legend, Micah Shilanski. Micah, how are you, my friend?
Micah Shilanski: Jarvis, it’s another wonderful day in paradise. Still down in Arizona with the fam, so just having a great time down here. I’m definitely acclimatizing because I put a jacket on when it’s 50 degrees outside. We’d normally call that a summer day in Alaska, but apparently I’m acclimatizing, but it’s so wonderful. The benefits and blessings we have and the lifestyle that we can have and operate, that benefits our family with our chosen profession is just amazing to be able to spend that quality of time, especially I know that you have as well, minor children, and to be able to be intentional with that time and spend with them. Anyway, it’s just such a blessing and so grateful to be in this profession and to very intentionally design a lifestyle that benefits our clients, our team, and most importantly, our families.
Matthew Jarvis: I love that. Related to that lifestyle, Micah, I just spent the last week down in Cabo, Mexico doing mountain biking with an advisor friend.
Micah Shilanski: Yeah.
Matthew Jarvis: Micah, one of the questions he had was about this podcast. Maybe this is a confession here, but he said, “Jarvis, how far in advance are you planning the podcast episodes?” I explained to him, I said, “They’re recorded weeks in advance so that there’s a queue of them,” but really Micah, it comes down to what are you and I most passionate about in our own practices. Not what are we most passionate about other people doing. What did we read in the news that we’re passionate about? This is really like what in our practice and our businesses are we most passionate about talking about? That’s what we do because, like doing Masterminds, even if no one listened to this episode and now tens of thousands of people do, if no one listened to it, we’re still having a great time and we’re improving our practices.
Micah Shilanski: The biggest thing that we’re getting out with this right, is we definitely want to help advisors. We want to help you, our listeners grow your practice, et cetera, but we want to take it from a position of authority, not a position of theory. We want to say these are the things that we have learned and done and we try to make that clear and feel free to push back listeners. If we’re getting off our area of expertise, we’d really love to hear that, but we really try to focus on what are areas that we’ve made mistakes on and let’s air those. Let’s go through those. Again, Jarvis, to your point, it really keeps you and I accountable to make sure we’re delivering massive value to our clients.
Matthew Jarvis: Yeah, today the topic we’re discussing is actually something we ran into, not in our practices this week, but at the perfect RIA this week, which is the request, can I get a discount? Micah, you and I have, between the two of us, had the fee discussion thousands of times at this point between the two of us.
Micah Shilanski: Yep.
Matthew Jarvis: It can be a really hard discussion and if you are newer in your career, I guess wherever you’re in your career, if you are not totally confident in your fee schedule and the value you provide, this is probably the most dreadful conversation you can have. You probably have reoccurring nightmares about people asking you about your fee and for a discount on your fee.
Micah Shilanski: It’s one of those things. I think this comes with a self-confidence or law of attraction, or however you want to phrase that in your own head, but when we’re focused on something and the focus could be, I hope someone doesn’t ask me or the focus is I’m nervous about, or I don’t think I’m worth X, then all of a sudden we’re going to attract those circumstances into our lives, where it becomes an issue. Versus once we internalize and we know what our value is and you might be listening to this and say, “Yeah, I know I offer value, but I still need to offer a discount.” Okay, then you really don’t know your value. This is my pushback I’m going to give. Once we truly know the value in which we provide and the services that we offer, we are more confident in this and we don’t get that question very often. I remember early in my career, I got it a whole bunch. Once I finally developed confidence in the services that we were providing and the value in which we offer to clients, it went away magically. It was pretty neat.
Matthew Jarvis: Yeah, that’s a great point, Micah and I think just to really drive that home, if you get awkward at all when the question of your fees come up. If me asking you what your fee schedule is or asking you for a day discount for your fees or asking if there’s any other way to do your fees, if the tone of your voice, if your mindset, if your mood changes at all from if I asked you, what is your name, then we have an issue around fees. If I say, “Hey, Micah, what’s your name?” You’re going to say, “My name is Micah Shilanski”. There’s not going to be a pause. There’s not going to be hesitation. There’s not going to be awkwardness. You’re not going to look at your feet. You’re not going to hope they don’t ask your name. It’s just natural, but if I ask you your fee, if I ask you for a discount, you’re like, it’s really important that we provide value… Now we have a problem.
Micah Shilanski: I was hoping you were going to ask me what my name was. I was going to say, Matthew Jarvis. Wait, no. It’s… Yeah. That’s the confidence that we need to have. Also with the fee discussion, we talked about this last week on the podcast as well, not putting your team in an awkward position is making sure that in your team, who can have a fee conversation and who can’t. This is going to be really, really important to qualifying questions. The process in our office, my RM team is 100% fine talking to prospects about fees. They have zero qualms with that whatsoever. It’s $497 to book an appointment and they’re great with that. Once it gets past that, the AUM fee or the financial planning fee, they don’t feel comfortable. We could dive into a whole different podcast about what that head trash is or what that mentality is, but it’s also about knowing the success of my team and saying, perfect. They can have this conversation. That means I need to be super confident having this other part of the fee conversation.
Matthew Jarvis: It really is. Like you said, it’s tough in professional services. We’re not alone in professional service, but in professional services, it’s very difficult to say, “Hey, my fee should be X,” because you don’t have a cost of goods sold. We can argue that cost of goods sold is a terrible way to set your price, but there’s not really a lot of incremental costs. What do you have, an extra license at your financial planning? It can be tough to do. There’s a lot of head tracks that comes around this and when the discussion of, should I discount my fees or will you give me a discount, Micah, I think there’s a couple things that come up. I’m going to take the easy one because I’m going to let you going to take the hard one.
Sometimes you’ll meet with people that ask for a discount because they just cannot afford your fee. Let’s use your $497 initial appointment. They say, “Listen, I’m having trouble getting out of debt. I don’t have $497.” There’s this temptation to say, “I need to do a good deed. I need to discount my fee.” That’s totally incorrect. There is a place for pro bono financial planning. It’s within a time block called pro bono financial planning. There are amazing resources for people who don’t have resources. It’s called Dave Ramsey’s Financial Peace University. I do one thing. I have one niche and it costs this and if that’s not a good fit for you because you can’t afford it, you can’t see the value. There’s not enough value for you. Whatever the case would be, then go in peace. I only do this one thing for this one fee.
Micah Shilanski: Before we jump into the harder one, let’s take it in another context. Let’s put it with a physical item. Let’s pick on Apple. Let’s pick on your iPhone. Let’s pick on your computer. You can’t afford a thousand dollars for almost a fricking supercomputer in your pocket. Does that mean you go to Apple and say, “Hey, I’d like a discount. I can’t afford this, but I’d like the same phone.” The answer would be no. Great news is the marketplace is designed, Samsung with the flip phone for probably 50 bucks, or I don’t even know what they are. There are other options that you can have for those resources. You, as the financial advisor do not have to be the sole solution to every person’s financial problem. Jarvis, not saying this isn’t cold hearted, I’m going to say this from a pure value perspective.
I know my niche, and I know I can offer massive value. If someone comes to me in debt issues, I have been out of that game for so long, I would not be able to add massive value to them. I refer them. Perfect. Here’s the Dave Ramsey course. Here’s another couple of advisors that specializes in debt reduction, et cetera. You need to talk to them. Micah, you don’t want to work with me. It’s not that I don’t want to work with you. It’s that I don’t know enough about this. I don’t do debt consolidation. I don’t do these types of things. The game has changed and I would do you a disservice. I believe that to my core. Could I figure this out? Yeah. I kind of think I could figure almost anything out, but that’s not what they’re hiring for. They’re hiring me to be an expert in this area and I’m not.
Matthew Jarvis: Yeah. Micah, I think where this comes up the most often, at least from my experience and again, for our listeners, love to hear where you are running into this in your practice. Not hypotheticals, by the way, please don’t ever email us with a straw man or what if an alien comes down from Mars and they want a deal. Don’t waste our time with that, but if you say, “Hey, listen. I met with a prospect and they pushed hard on that.” We love to hear those. You can email those to lifestyle@theperfectria. Micah, where I see those come up myself most often, people who are friends and people who are friends of clients. I feel like, well, maybe I can make an exception to that, but you can’t. You cannot make exceptions to things because once you go down there, once you open that door, it’s like once you check your email. I’m only going to spend four minutes on email. Sure you are. I’m only going to spend four minutes looking the Wall Street Journal. Sure you are. You can’t open that door. My fee is X. Maybe once a year, I’ll revisit that, but my fee is X and it’s that. It’s just not negotiable.
Micah Shilanski: Jarvis, slightly off the discount topic, but one of the things that came up to me recently, is a good shooting buddy of mine came up and had a substantial increase in money in his life and he didn’t know what to do with it. He called me. He’s like, “I don’t know what to do.” I talked him through a couple different things. I said, “Hey, let’s book an appointment. Let’s go through these other things.” He is not set up as an ideal client, but he wants to talk to me because he doesn’t know what to ask. Perfect. I have a slot for that. It’s called a prospect appointment for $497 and I am happy to chat with him under that professional relationship. I know, and I’ve already told him this. I said, “Look, this probably isn’t going to work for us long term,” but he wants to talk to me first. Great. We have created a system for that. That’s our $497 appointment, and then from that, I’ve already told him, I said, “We’re going to help you find another financial advisor because what you’re dealing with is not what I specialize in.”
You’ve got to have a system for that. If you don’t have a system for that, then you just need to stop right there or maybe through a 15 minute phone call with them and say, “I’m not the specialist in your area. Here’s the specialist which you can go to get help with.”
Matthew Jarvis: Yeah. Micah, I love this point about having a system and I think that’s where people get caught off guard is they’re not sure what to do with it. They’re not sure what to do with the friend that they want to help out. I always encourage advisors. We encourage advisors, put this in writing, have it just in writing for yourself. If someone asks for this, if someone asks for a free hour of my time, what do I say so that you’re not in the moment like, “I guess maybe on Tuesday we could do….” No. If someone asks for an hour of Micah’s time, great. It’s $497. He’d be glad to meet with you. If you ask for an hour of my time, I’d say, “I really just don’t do that.” I go through my whole doctor analogy. I’m like a knee surgeon. I only do knee surgery. What you need is a cardiologist. I don’t do cardiology. I’d be glad to refer those. I recommend you go wherever you go. You just need to have an answer for that. That takes away so much pressure.
Micah Shilanski: Jarvis, talking about airing head trash. This is going to be super funny.
Matthew Jarvis: Yes, please.
Micah Shilanski: I don’t think I’ve ever told you this. I have no problem sitting down with a client and charging a value based financial planning fee of thousands of dollars and two percent on money, AUM management fee. I hesitate on the $497 prospect conversation.
Matthew Jarvis: Interesting.
Micah Shilanski: My RMs handle it, so it’s beautiful. I never have to. I said, “Great.” It’s my RMs. I don’t talk about fees. I don’t talk anything else. I get them to the RMs and the RMs handle it and they do a beautiful job. I don’t know if it goes back to an abundance issue about being so hungry for prospects when I started, but I really have a hard time with that. For me, I just don’t have that conversation because the RMs do it so beautifully. Why should I get involved and mess this system up?
Matthew Jarvis: You go to any medical professional, let’s set aside like things covered by insurance because that’s just a disaster. When I take my kids to the orthodontist and I meet with the orthodontist, she never, ever, ever talks about money. If I ask, she says, “Matthew, you know what? We’ve got this gal.” I can’t remember her name. “She’s going to help you figure that out. Cause I just don’t take care of that. My job is to make sure your kid’s teeth look beautiful. Her job is to make sure everything gets paid. You can talk to her.” Then she leaves the room, probably because she doesn’t enjoy that conversation.
Micah Shilanski: Yep.
Matthew Jarvis: That’s her system. I will never talk about fees ever. I have a person who does that.
Micah Shilanski: Doctors shouldn’t talk about money because they’re horrible at it.
Matthew Jarvis: They’re horrible at it, yeah.
Micah Shilanski: Yeah. These are things about knowing where you’re going to be sick successful at and going on that and creating a system for success.
Jarvis, let’s talk about the other one, which is more challenging I think on the discount side. You have the one discount which you brought up earlier, which was, I can’t afford this, but I really need your services. How should that work? Then you’re going to have the other ones that I think are a little bit more fun, but are a little bit more challenging that people want to push for a discount just to see if you’re actually convinced of your own price and I am a person that’s going to fall on that camp. If I see any hesitation in price, now this has become a game and now I’m going to push for a discount just for fun and just to see how low I can get that price.
You could be saying that’s cruel, that’s mean. That’s just how I’m wired. I see blood in the water and now I want to go for that. Guess what? We have clients that do the same thing. Retired colonels for me, whenever someone’s coming in as a retired colonel, I know this is a conversation they’re going to have because one of the things they do a lot is push back. If you know retired colonels, you know this is the case. They push back on things instantly and they come with a lot of force and so they’re going to push back on my price and I know it so I’ve got to have a system for success when that comes up.
Matthew Jarvis: Yeah. Retired colonels, entrepreneurs, anybody that’s involved in real estate, working with vendors and contractors. These people, they’re used to pushing back all the time. This, by the way, is what separates great advisors from just okay advisors, is great advisors anticipate this. Great advisors say, “All right. This prospect is a retired colonel, they’re an entrepreneur. They’re going to push on this fee. I need to make sure that I’ve rehearsed again before the meeting, when they say this, how am I going to respond?” Micah, when they say, “Hey, Micah, I get that your fee is this, can I get a discount on that?” They’re going to be smarter than that. They’re not just going to ask for a discount, “I know that’s what you charge everybody else, but what’s my rate?” That’s probably more along the lines of what they’re going to ask.
Micah Shilanski: Brilliant. They never say the word discount.
Matthew Jarvis: No, and never can I?
Micah Shilanski: That is correct.
Matthew Jarvis: A good negotiator is not going to say that.
Micah Shilanski: Yeah. It’s always an assumption that they’re going to get this and they’re going to go through with it so generally what I like to do is whenever they say what’s my rate going to be? What if I only do so many services? How do we do this? And say, “I’m fully flexible on my financial planning fee. It’s a hundred percent negotiable. This is just the minimum you have to pay. You’re welcome to pay anything above this price.”
Matthew Jarvis: Micah is delivering this with a big smile. This isn’t like a snarky comment, right? It’s to have fun with them. It throws them off the game because they’ve never heard that before. Again, separating great advisors from just okay, advisors. An okay advisor would say, “This is my fee.” A great advisor’s going to take that to the next level. Make them think like they haven’t thought it before.
Speaker 3: The perfect RIA challenges financial advisor to answer the question. What would you do if you weren’t afraid, surround yourself with the financial advisors who share your common values and goals towards success. The advisor is you. The time is now. Don’t be like most people who fail to take action and achieve their dreams. Go online today@theperfectriaa.com and decide, decide what type of financial advisor you plan to be.
Micah Shilanski: In my heart of hearts, I truly believe this. This is the value in the service I’m providing and this is a fair fee because again, I’ve already gone my through my three P’s in my mind with this prospect. Personal, productive, and profitable. Personal, I’ve got to like them, they’ve got to like me. Productive, I have to be able to add value. They have to be able to see the value. Profitable, the value that I’m generating has to be worth the fee I’m paying and it has to meet my fee matrix. It has to go through all three of those P’s. I’ve already done that. I’ve already seen that I can add value in their situation, therefore I’m 100 percent confident in the fee in which we’re charging, because guess what? It adds value to them.
Matthew Jarvis: I love it. Micah, again the response has to be true for you. This is a mistake I made early in my career was using other people’s scripts word for word. You might think of Micah’s transcript. You might think, I can’t say that. That doesn’t work for my soul, for my geographical region, for whatever the case may be so you’ve got to translate that for what you’re comfortable. One thing I say to prospects when they ask for discount, I say, “Mr and Mrs Prospect, I would really like to work together. I think we can deliver a lot of value to you. Here’s the thing. I never discount my fee because if I give you a discounted fee, I would feel like I need to go back to all my existing clients who have been with me for decades and offer them the same discount and suddenly I’m not making any money and now I’m in trouble with my wife so therefore I just don’t do discounts, period. I just don’t. I’m sorry.” That feels really good to me.
Micah Shilanski: Perfect.
Matthew Jarvis: Again, we can poke holes on that. What is this, communism? If you get rid of one person, you have to get rid of… Nope. That’s just my answer and it works really well for me.
Micah Shilanski: That’s the beautiful part about this system and Jarvis, I want to pull out what you just said a second ago. You have to find a script that works for you so that doesn’t mean you have to duplicate mine or Jarvis’ or somebody else’s. What you have to do is find out what you are confident in saying. If you’re not confident in saying it, a couple things that you can do. One, say it a hundred times every day. Yep. That’s dramatic, but guess what? Say it and when you say it in your mind, you’re going to be thinking, I don’t believe that, I don’t buy it, et cetera. You need to keep saying it until you believe it, until you buy it otherwise you shouldn’t be bringing on any clients because you’re screwing them all. If you are not adding value for the service and the fee in which you are charging, then you are taking advantage and screwing your clients.
It’s one or the other in my mind. That’s it. It’s a binary question. It’s A or B. There is no middle ground. You provide more value for the fee than you charge or you’re ripping your clients off. Which camp are you in? I am in the, I provide a tremendous amount of value camp to my clients. They’re delighted to work with us. I’m delighted to see them. I have a mini search coming up. I’m delighted about bringing them in the office and going through and making sure we’re adding value for the fee. Which camp are you in?
Matthew Jarvis: If you are an inbetweener, let’s go for people that have not yet established that level.
Micah Shilanski: No. I already said it’s binary. It’s one or the other. I didn’t say… What is this in between crap you’re bringing out?
Matthew Jarvis: That’s all right. I’ve self-identified it’s in between. For parts of my career, when I struggle, this is when I created our prospect process. By the way, you can go back and watch our webinar series for members with a backstage pass and Invictus.
Micah Shilanski: That’s right.
Matthew Jarvis: Put the choice on them. My is fee is X. My value is Y. If that makes sense to you, let’s work together. If it doesn’t, then let’s part ways, which by the way, Mike, you and I still use that to this day.
Micah Shilanski: Yeah.
Matthew Jarvis: Those two are not negotiable. My fee is not negotiable. The value I provide is not negotiable. Just like if I go to the Apple store and I say, “Hey, can you make this in fluorescent purple?” They’re going to be like, “No, these are the six colors we have.” “Yeah, but can I get fluorescent purple?” “No.” “Can I get a deal?” “No, it’s this iPhone. It’s 10 gazillion dollars. You’ll need to replace it in two years. That’s what the deal is. Take it or leave it.” Same with the Ritz Carlton, with flying first class, with anything. It’s this price. You have to go in with that level of confidence and Micah, here’s where the danger is. As soon as you start maybe saying that either of those are flexible or even implying that either of those are flexible, suddenly everything you do becomes negotiable.
Micah Shilanski: Yes.
Matthew Jarvis: Hey, that Roth conversion. Are you confident on that or is that flexible? Not selling when the market’s down. Are you confident or is that flexible? Not buying leveraged Bitcoins. Is that confident or is that flexible?
Micah Shilanski: This really comes into the client service and I want to talk about this and the value in which we offer. I want to pull out a little bit of what you just said, because it was something that came up relatively recently. It was the end of last year with a client and they went to buy a condo and just made all of these horrible decisions. One, they listened to a real estate agent, which is generally a bad idea. They were going to do a 60 day rollover, but they really couldn’t and all of these horrible things that they were going to do and really devastate their financial success and the husband was all about moving forward with it, but I was like, “Absolutely not. This is a bad idea,” and because when I stand up and I say, “No.” No means no and yes means yes.
Sure. There are decisions that say, do I do a 20,000 or 30,000 Roth conversion? Okay. There’s not a deal breaker there, but this was a deal breaker conversation, and because the client knew my convictions and this all started with a financial planning fee, by the way, because they knew my convictions, no was no. If they did this, I would graduate them because I’m not going to captain a sinking ship. I’m not going to steer that ship into the iceberg. I’m not going to have any part of that whatsoever. This was a very hard conversation, but because I had my convictions, we were able to steer them away from making this horrible decision that they were about to make, that couldn’t afford to do.
Matthew Jarvis: Micah, this almost has become an episode on conviction and we think that fees…
Micah Shilanski: Yeah.
Matthew Jarvis: …are the separate issue, but it’s really about conviction. A quick example of that. When I was flying back from Mexico, we were flying into Seattle. The pilot comes on the thing, he says, “Hey, blah, blah, blah, blah, blah. We can’t land in Seattle. We have to go land at an alternate airport.” I was quite upset by this because I did not want to land at an alternate airport, but he did not say, “Could you do a quick show of hands? Who wants to give it a go of landing in Seattle?” He didn’t have the intercom on while him and the co-pilot are arguing with air traffic control, whether they can land or not. That was probably all going on. He comes on, “Ladies and gentlemen. Due to blah, blah, blah, blah. We are not going to land in Seattle. We’re going to land in Everett. When we land in Everett, we’ll answer all your questions about what we’re going to do next.” Okay, great. Here we go. Again, once you waffle and you think, well, that’s different. These are people’s lives. I don’t know. Give someone the choice of dying early or running out of money. You might be surprised which person—
Micah Shilanski: That’s right. That’s right. Jarvis, that brings about flashbacks when you and I were flying together for the first time in my plane and sure enough, that same thing happened. We had to deviate.
Matthew Jarvis: Sure enough, yeah.
Micah Shilanski: Your version of this story. We made a left and then Anchorage, where we were landing, disappeared. It was all in cloud so we had to go somewhere else, but you didn’t object to it. I don’t think it was open for discussion, but yes, it was one of those things that we had to make a change. Again, how much conviction do you have in your recommendations?
Matthew Jarvis: I love it. For the record on that story. It was not when we couldn’t land in Anchorage because I couldn’t see where Anchorage was either. It’s when Micah takes me to a snowed in soccer field and says, “This is the air strip. We’re going to land.” I said, “Well okay, I guess this is Alaska.” Just because we’re telling this story, we land in the snow in the middle of nowhere, Alaska…
Micah Shilanski: Safely.
Matthew Jarvis: In the middle of nowhere. Yes, safely. It was a very smooth landing and then we’re standing there by the plane and he says, “Don’t worry, someone’s going to come get us.” “Okay. I’m going to freeze to death here pretty quick. I guess this is Alaska,” and sure enough, just like your conviction said, someone did show up to get us.
Micah Shilanski: Somebody showed up and we were good. Had a nice meal and had to drive home.
Matthew Jarvis: Yeah, we did. It was a lot of fun. It was a lot of fun.
Micah Shilanski: All right, so on the conviction. I want to pick on this just a little bit more since you brought this up and this is again, going back to this discount aspect of it. How convinced are you in your own beliefs at the value in which you add and you’ve got to make a stand and that stand is at the beginning of your relationship so you can make sure this client is really getting the best benefit. What head trash do you need to deal with and this is probably going to be one of those action items, because we all have it. I just aired one of my head trash issues. You know about the $497 fee. Okay, great. You have head trash around this. How are you going to deal with this? Sometimes we need to just muscle through that head trash. We need to figure out a system to get it.
Sometimes we need to figure out an alternate system to avoid us from breaking our own rules. I don’t schedule anything on my calendar for clients period, at the end of the day. Why, because I’ll break my rules.
Matthew Jarvis: Yep.
Micah Shilanski: I will. There’s a $10,000 fine every time I break the rules in my firm. Okay. I’m a lot less likely to break one of my process now that I have such a big extreme accountability on these things, but that tells you that I was doing it and I was causing issues for my clients. I was causing issues for my team because I was breaking our own processes. This is the exact same thing with your fee. If you want to be a discount broker, perfect. Go for that, but how equipped are you to compete with Vanguard, just out of curiosity?
Matthew Jarvis: Yeah. This goes back to being intentional, which we’ve done dozens of episodes on. If you want to be the lowest cost provider, that’s a model going with that intention. If you want to be a high quality advisor and deliver master value, then that needs to be your model. Micah, another example I’ve seen that advisors use. By the way, I see this in all sorts of industries, almost every industry, by the way, except ours. Ours is like the only industry where the fee discussion is a verbal discussion. Everyone else, it’s a written discussion. They slide a piece of paper across the table and they say the fee is X. If you find yourself struggling in that verbal conversation, quit having a verbal conversation. When it’s time to have the fees, simply slide it across and say, “Here’s our fee schedule,” whatever it is. How would you like to proceed?
Same with my orthodontist because it’s obviously top of mind, I’ve been paying them recently. “Great news, Mr. Jarvis. Here’s the fee for this round of treatment. If you pay cash up front, you get a five percent discount.” “Wow. Thanks guys. The generosity here is off the charts,” but they don’t say, “How do you feel about $2,700?” No, it’s $5,493. You can get a five percent discount if you pay cash. Find a system that works for you. Micah, again, you cannot come to the table with any kind of wavering thought.
Micah Shilanski: I want to push back on that. Did you ask if they could just do a half-ass job? Could you pay half as much? What if they made them look good but not great teeth for your kids? Was that an option from the orthodontist? Did they say, “Good news. If you don’t want to pay this, we can do not as good work?”
Matthew Jarvis: Since this is my third child going through the same orthodontist, our discussions have evolved a little bit. They did tell my wife one time, this is where systems break. They said, “Hey, if you pay it today, you can get the five percent discount,” and she didn’t have our HSA checkbook with her. I said, “Tell them you’re going to pay them next week.” “They said I won’t get the deal.” “Trust me. We’ll get the deal.”
Micah Shilanski: You’ll get the deal.
Matthew Jarvis: You see that Mercedes out front that says Jarvis on it, too?
Micah Shilanski: Yeah.
Matthew Jarvis: Another thing advisors can do. This is something I did all the time. Borrow someone else’s terminology. Just say, listen, if Micah is confident saying this, then I’m going to… If Jarvis is confident in saying, duh, duh, duh, I’m just going to use that. Fake it until I make it. It’s a mindset game.
Micah Shilanski: All right. This podcast is all about action items, so let’s make sure we’re jumping into this, Jarvis. Number one, write out your fee schedule. This is a great example that should fit on a post-it note. If there’s more than one tier, you have a problem. I don’t want 17 tiers of things broken out. Why do I bring this up? I’ve seen this. This should be very, very simple. Your fee schedule should fit on a post-it note. It should be non-complex. Not to you. It should be non-complex to someone else, a third party that can see it and know exactly what you charge for your fees.
Matthew Jarvis: That third party should not be another advisor that you know, unless it’s an advisor who has a level of success that you want. If you have seen Micah at a conference and you want to have him look at your fee schedule. Cool. That’s a great example. If you’re a Invictus member and you want to email that in, we’d be glad to look at it because we have expertise there. Otherwise don’t go to other less successful advisors. You could go to your spouse, you can go to your office manager. You need to go to someone who’s not going to say, “I actually also have 17 fee schedules.”
Micah Shilanski: Perfect.
Matthew Jarvis: Second action item related to that. You need to have in writing if you struggle with this, how am I going to respond to these issues and Micah, I love your point. If this is something you get awkward about at all, when someone says, “Hey, what discount can I get on this?” You need to practice that again and again and again, until it comes out as smoothly as now. Remind me your name again. This can’t be a spot of hesitation.
Micah Shilanski: I love it. Number three, you need to wrap this up with extreme accountability. If you fluctuate at all and we’ve had mass success with this, by the way, with our other advisors. Jarvis, offline, you were telling me about an advisor we work with, you started working with him about three years ago and his weighted average in his fees, went from 60 BPs now to 105 BPs. He’s brought on more clients. He’s continued to grow his practice. He’s done these amazing things over time, but it was all about getting confident about the fees in which he was charging. What are the really great ways to do this? To say great, going forward, no more exceptions and for every one exception you have, you’ve got to fire your top client. It’s okay. Give out as many discounts as you want and if you give out five discounts for five different clients, you’ve just got to fire your top five clients based on revenue. The choice is yours, but all of a sudden, when you do this now, all of a sudden you realize how costly those discounts can be and how it’s probably not worth it in the end. That’s extreme accountability.
Matthew Jarvis: That by the way is not a fictitious example. We’ve set that up with multiple advisors. Perfect. Every time you take a person below your minimum or give a person a discount, just fire your top client because you’re not delivering massive value to them by taking on these non-ideal clients. Not a big deal. Take as many as you’d like.
Micah Shilanski: Go for it. Knock yourself out.
Matthew Jarvis: I would say one other thing on that. If you’ve had success with your fee discussion, whether that’s how you articulate that, how you are handling objections, concerns, and even fee increases, whatever that is. We love to hear those stories. Send those to lifestyle@theperfectRIA, go to the Perfect RIA Facebook page or LinkedIn page and show us. We love to hear those success stories. They get us very excited. This advisor that we mentioned that went from 60 basis points to 105. It is transforming his life. Micah, it gives you and I so much excitement and energy to keep doing these, to have this whole infrastructure in place and by the way, it’s not just for Micah and I, though that’s what we care about right now. It’s for every other advisor because if our story helped you, your story will help another advisor. Kind of pay that forward if you will, by saying here’s where I struggled in the past. Here’s how I fixed it and here’s what I’m doing going forward.
Micah Shilanski: The more facts we share about this and Jarvis and I, we get all bent out of shape about theory in our industry, but the more advisors that step forward and say, “Here’s actually what happened in my practice.” Good and bad, and just being open to it, openly sharing your financial planning, saying, “Great. This is my one page plan. This is my 50 page plan. This is what I’m doing.” Show me what you’re doing and let’s see how we can improve. The more we can have this open communication, the more we can transform this industry. What I get excited about is just not the advisor’s lives which we’re changing. The client’s lives that we are changing because by pushing up this elevation in this bar, making better advisors, we are making better clients. We’re having more success with clients in the end. In terms, that’s really what gets me excited.
Matthew Jarvis: Yeah. It’s so exciting. Really appreciate everybody for listening. The TPR nation continues to grow by leaps and bounds. We love doing everything that we’ve got and really until next time, happy planning.
Micah Shilanski: Happy planning.
Hold on before we go. Something that you need to know. This isn’t tax, legal, or investment advice. That isn’t our intent. Information designed to change lives. Financial planning can make you thrive. Start today. Don’t think twice. Be a better husband, father, mother, and wife. The Perfect RIA. The Perfect RIA.
