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Q: How do I start fee-charging?

by: Ben Thompson
  • 04/01/2011
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Q: How do I start fee-charging?
Q: I am keen to start charging my clients fees and am not sure how to start, particularly with customers who end up with a direct deal recommendation. Can you offer any tips?

A: Ben Thompson, director of mortgages, Legal & General

This sort of question is very topical – we have seen an increase in the number of advisers charging fees since the downturn and yet there are many that still find making that leap quite challenging, especially those that might have prided themselves on a no-fee strategy historically.

One of our close business partners, Gareth Herbert from The Mortgage Advice Bureau recently spoke about this at The Mortgage Event and covered this very well.

One of the starting points was a suggestion to go back to your most recent clients that you have advised and helped and ask them two questions:

1. If I had charged you a fee and disclosed this up front, would you have still dealt with me?
2. If yes, what would you have expected me to charge for the X hours it has taken me to complete this for you?

He found, probably unsurprisingly that practically all answered yes to the first question and all specified a sensible amount that they would have paid. I think this is worth a try.

Also, two other key points:

3. Work out exactly what you do for clients and precisely how this differs from direct channels – in fact why not make a point of showing clearly the difference between what you offer and what they might offer, i.e. ‘added value’. This is what they will pay for, and this should overcome any concerns re objections when direct deals are used.

4. Be clear and reasonable about how much you decide to charge, and stick with it. Be clear on how this breaks down and how you arrived at the figure (what happens locally in your market/what do others charge?) – your confidence in your service and this figure will lead to a positive reaction, the reverse also applies.

My final thought is you are a professional and should be paid in line with other professions so don’t see this as something wrong. When surveyed, customers say they pay for advice, so get to know your customers really well and make sure they feel as though they’ve had good, tailored advice, then they will pay you.

 

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