A story about professional fees.
I get asked about my fee structure occasionally. It's not a bad thing. And I'm always completely open and transparent with my response.
But I've usually found that I get asked about fees because there's generally not enough information around what a financial adviser actually does, and also the value they deliver for their clients. This creates a problem.
The problem is simply a gap between expectation and reality. This is the responsibility of the financial adviser - not the client. When there's not enough information provided to a client - they'll create their own expectations of what a financial adviser can do for them. This is natural. But the flow on effect is that this will also set their expectation on fees. This expectation and reality is the real problem. And if not addressed, a family with genuine needs that can be easily fixed, may not even cross the line to become a client and get their family finances all sorted. This is a real shame - and one that with a bit of help, can be easily fixed too.
I've found that the following story between a building contractor and their customer is helpful to bridge that expectation and reality gap.
CUSTOMER: "How much will it cost to do this job?"
CONTRACTOR: "It will cost $2,800 to complete it"
CUSTOMER: "That's WAY too expensive for this job!!"
CONTRACTOR: "How much do YOU think it would cost?"
CUSTOMER: "No more than $800 - MAX!! It's a simple job!"
CONTRACTOR: "I can't prioritise my time for so little."
CUSTOMER: "People in your line of work are so greedy."
CONTRACTOR: "Sorry you feel that way. Why not do it yourself?"
CUSTOMER: "But... but... I don't know how to do any of this."
CONTRACTOR: "For $900, I'll teach you EXACTLY how to get this job done. Then you can spend $800 to do the job and you'll still be saving $1,100 - PLUS... you'll get the knowledge and experience for the next time you want to do a job yourself."
CUSTOMER: "Deal!! Let's do it."
CONTRACTOR: To get started you'll need tools. So you'll have to buy a welder, a grinder, a drop saw, a drill press, a welding hood, gloves and a few other things."
CUSTOMER: "But I don't have all this equipment and I can't buy all of these for one job."
CONTRACTOR: "Well then for another $300 more I'll let you rent my tools... and you'll still be saving $800."
CUSTOMER: "That's cutting into my savings. But I'll rent your tools."
CONTRACTOR: "Okay! I'll be back on Saturday and we can start."
CUSTOMER: "Wait. I can't on Saturday. I only have time today."
CONTRACTOR: "Sorry, I only give lessons on Saturday, because I have to prioritise my time and my tools have to be at other jobs with other customers all week long.
CUSTOMER: "Okay!! I'll sacrifice my family plans on Saturday."
CONTRACTOR: "Yeah... me too. Oh... and I forgot... to do your job yourself, you also have to pay for the materials. Everything is in high demand right now, so your best bet is to get your truck and load up at 6am before everyone else gets there."
CUSTOMER: "6am? - on a Saturday??? That's way to early for me. And also... I don't have a truck."
CONTRACTOR: "I guess you'll have to rent one. Do you have a couple of strong men to help you load and unload everything?"
CUSTOMER: "Ummm... ya know... I've been thinking. It's probably best if YOU get this job done. I'd rather pay someone to get it done correctly than go through all the hassle.
CONTRACTOR: "Smart move, sign this and then I'll get on with my work."
The reality is this
When you pay for a job, especially personalised and handcrafted, you pay not only for the material used, but you are also paying for:
Attention to detail
Safety and Security
Payment of Licenses
Payment of tax obligations
No one should denigrate a professional's work by judging prices - especially when they don't know all the elements or costs necessary for the production of such work. You can't haggle over a service that you don't actually have the skills or knowledge to do yourself.
Be smart. Trust a reputable, skilled and licensed professional - and read about what other people have to say about them. Do your own due diligence. And never forget that you always get what you pay for.
If you've got any more questions, contact me and I'll be glad to go through them with you.