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As a financial advisor, you have an unfair advantage when it comes to raising your fees compared to other professions.

By simply doubling your fees, you can almost double your income—while working less than you ever had before.

Why then don’t more financial advisors raise their fees?

Well, here’s the cold, hard truth:

They’re worried that raising their fees will cause all of their clients to cancel. But this isn’t true, let alone likely. In fact, various psychological studies have proven that your clients will enjoy paying you more than paying you less.

It sounds counterintuitive, but it’s true.

In today’s episode, you’ll discover the psychological reasons why your clients want to pay you more, how to use analogies to eliminate “fee objections,” and how to make more while working less.

Listen now.

Show highlights include:

  • This simple equation proves how valuable—and profitable—raising your fees can be (even if you’re hesitant) (0:58)
  • Why financial advisors are particularly capable of doubling their income while working a fraction of the time. Here’s how to do it… (1:50)
  • The counterintuitive reason raising your fees is the simplest way to minimize (or even eliminate entirely) “fee resistance” from prospects (2:13)
  • Why lowering your prices actually makes your ideal prospects think up more objections (and the physiological reason for why raising your prices attracts fewer objections) (4:55)
  • How to jimmy the “Price Placebo Effect” to make more money by working less and dealing with fewer client headaches (6:29)
  • Why making your clients pay more will actually make them happier to work with you (weird, but true) (6:40)
  • The “SAM” marketing secret for eliminating price and fee objections before they even come up (and how to handle various objections even if they come up) (10:20)
  • 5 “done-for-you” analogies about financial advising that can transform even the most skeptical prospects into paying clients (10:37)

Go to https://TheAdvisorCoach.com/Coaching and pick up your free 90 minute download called “5 Keys to Success for Financial Advisors” when you join The James Pollard Inner Circle.

Want to figure out the secrets for building a bigger and better email marketing list? My latest product explains all my best-kept list-building secrets. Get it here: https://theadvisorcoach.com/lists

Read Full Transcript

You're listening to “Financial Advisor Marketing”—the best show on the planet for financial advisors who want to get more clients, without all the stress. You're about to get the real scoop on everything from lead generation to closing the deal.

James is the founder of TheAdvisorCoach.com, where you can find an entire suite of products designed to help financial advisors grow their businesses more rapidly than ever before. Now, here is your host, James Pollard.

James: Welcome to another episode of the Financial Advisor Marketing podcast. I hope you're doing well. I've been having a great week. For some reason, I’ve been getting a lot of amazing emails and success stories from Inner Circle members about the cool things they're doing and the people they're helping, and it just means the world to me to see them succeed.
I actually have two podcast episodes about raising fees. I think it's “Advisors raise your prices” or something like that. If you scroll back to the previous episodes, you should be able to find them. I think that it's one of the best things financial advisors can do. I'm going to give you a really basic example of the math behind raising fees to help you understand why it's usually, not always, but usually a smart move. [01:11.7]

I want you to imagine that you're selling a $100 product and you're trying to decide if you should raise your prices. For the sake of easy math, let's say you're thinking about doubling your price to $200. The main question you need to answer is this: do you think sales will drop by more than half or get cut in half? If so, then you shouldn't do it. However, even if your sales cut themselves in half, you will still make the same amount of money and you will have half the customers to deal with.
The nice thing about a financial advice business, especially for solopreneurs out there, is that you don't need that many clients. I mean, how many clients do you really need to reach your income goals? If you raise your one-time financial planning fee from $3,000 to $6,000, just for easy math, again, do you think your conversion rates will get cut in half or drop by more than half? I've got news for you, they probably won't, which means you will make even more money from the same amount of work you're already doing and you will do it with fewer clients. [02:12.4]

Anyway, this guy told me that he is experiencing less fee resistance now with the increased amount than he did before with his lower fees. I think that's very interesting, but also not surprising if he is attracting a higher-caliber clientele. There's a meme online that I really love that talks about the difference between a $500-client and a $50,000-client. The $500-client says, “I just feel as though with this investment I am about to make a new that we should understand how our lives are about to change, and I need results and you can bring them. I am entrusting you with our livelihood and lives.” Then the $50,000 client says, “Money sent. Thanks,” and that is so true.
I have personally experienced both sides of this coin because I offer low-cost products ranging from $37 to a few thousand dollars. Then I offer relatively-expensive consulting, and I use the word “expensive” sparingly because it's not expensive in terms of what you get, but in terms of an absolute dollar amount, yes, it does cost more dollars than many other things. [03:15.7]

I will tell you that the clients who hire me for consulting are some of the coolest, most laid-back, awesome people in the entire world. They are such a joy to work with. Last month, I launched a new product for the first time in more than two years. It's called “How Financial Advisors Can Build Bigger and Better Lists”, and you can find that over at TheAdvisorCoach.com/lists, L-I S-T-S, “lists”, so list the plural of “list”.
This one financial advisor messaged me with this long, long, long message, talking about his life and his backstory and just giving me all of these unnecessary details, and he probably spent a good 10 minutes, it looks like, writing this message. Then he asked me if he or if I thought the product was worth it, and my answer will always be the same to these types of people. [04:03.5]

If you are agonizing over the money involved with the product cost, in this case $395, it is probably not a good fit for you, because I really don't make my products for people who fret and stumble and mumble and blush and toss and turn at night. “Should I invest with 395? Should I not?” It needs to be a heck yes or a heck no.
I say the same thing about my Inner Circle Newsletter. If you're someone who gives financial advice for a living, and at the same time, you agonize over $99 per month, then I legitimately cannot help you—and that's not a gimmick. That's not a marketing tactic. I mean this from the bottom of my heart. I legitimately cannot help you, because that is a mindset issue and I am not qualified to help you work through those.
But that brings me to the very first way to overcome price and fee objections, and it's something that seems counterintuitive. Raise your prices. Chances are you will get more objections with lower prices than you will at higher prices. It's funny because many entrepreneurs think the opposite will happen. They think if they raise their prices, then they will create objections, and if they keep the prices super low, then they're somehow avoiding objections. [05:13.8]

That is not true at all. I want you to understand, I want you to get this, your price will never be cheap enough for the worst clients. Even free is not cheap enough for them. Even paying them is not cheap enough for them. Do you understand that? You will never be cheap enough for the worst clients. Going cheap and staying cheap is a losing strategy.
Psychologically, a low price can signal to clients that the service might lack quality, expertise or comprehensiveness. People, they often use price as a heuristic for value for quality, and I’ll be honest with you, I think I'm falling into this trap. I personally think that I should raise my price on things like the newsletter. But the challenge I have with the newsletters specifically is that there are so many marketing things, like podcast episodes and ads and guides and web pages, all talking about the $99 price point, and it would be a huge pain in the butt to change. [06:08.7]

Still, I would love to make the newsletter $197 per month or $300 per month, or somewhere in that price range. If I ever do that all current subscribers will get grandfathered in, so you can sleep easy if you're currently subscribed. But I do think that sometimes people will see the newsletter and see just $99 and they're like, Oh, um, no, that's too low, I don't want to do that. I do think that happens to me.
There's even a term for this called the price placebo effect, where the perception of quality increases with the price tag, even if the product is the same. One of the most famous experiments in this vein was conducted by researchers at the California Institute of Technology and Stanford University. In this study, participants were given wine to taste and they were in an fMRI machine. That's kind of weird, isn't it, drinking wine in an fMRI machine? [06:55.7]

They were measuring the brain activity and the researchers told the participants the price of each wine they tasted as they went along. But the researchers sometimes lied to them, so they would give them cheap wine and say it was expensive, and vice versa. The participants consistently reported enjoying the, quote-unquote, “expensive” wine more, and their brain activity also indicated greater pleasure when they thought they were drinking high-priced wine.
This is not just a theory. This is not just something that I'm telling you. People's brains legitimately change, they get more pleasure, when they pay more—and just like the wine study, the price you set for your financial advice can significantly impact how clients perceive the value you offer. This is a real change that occurs in their brains. A higher price can often lead to higher perceived expertise and quality on your part, and the clients will be happier. [07:54.7]

Higher prices also have a built in social-proof aspect, because clients may assume if others are willing to pay a premium for your advice, then it must be worth it. Plus, higher-paying clients are usually much more committed and less likely to micromanage you, to email you every 30 seconds or to call you, “Why? Why is my portfolio down 1% today?” They just sit back, relax and trust the premium that they're paying for you, paying for your services, is top notch, it's expected, it's normal.
From a strategic perspective, I'm a strategy guy, charging a higher fee makes it easier for you to keep your clients happy. I don't want that point to get lost on you. You won't be stretched so thin, you can invest more of your resources into each client, and therefore deliver better outcomes. That means becoming a premium-service provider actually becomes like a self-fulfilling prophecy. You raise prices, attract fewer but more profitable clients, and you're able to make them happier. Therefore, you become a premium-service provider when you raise your prices. It doesn't happen overnight, but you do become that eventually. Isn't that cool? [09:04.4]

Hey, financial advisors. If you'd like even more help building your business, I invite you to subscribe to James' monthly paper-and-ink newsletter, “The James Pollard Inner Circle”. When you join today, you'll get more than $1,000 worth of bonuses, including exclusive interviews that aren't available anywhere else. Head on over to TheAdvisorCoach.com/coaching to learn more.

There's also a psychological effect called the contrast effect, and I’ve talked about this a lot in a marketing context because it's important to know what your clients and what your prospective clients are exposed to before they get to you. What are you contrasting against?
The contrast effect suggests that our perception of something is influenced by what we've recently been exposed to. For example, even a moderately-priced service may seem expensive when you directly compare it to a cheaper one. And guess what? Cheap clients buy cheap stuff. If someone wears cheap clothes, drives a cheap car and eats cheap food, then even your 100% completely average price will seem outrageous. However, if your client is used to high-quality goods and services, then your higher-than-average price will seem well within reason. [10:15.8]

Now, I’ve talked a lot about cheap clients versus expensive clients and raising your prices, so let me move on and continue with how to overcome price and fee objections. I personally like to use stories, metaphors and analogies. If you're on my email list, you know I use these a lot, because they're some of the most effective communication tools you can possibly deploy, so I'm going to share a few with you here and relate them to justifying your prices in what you do.
A tried-and-true metaphor, and you may have heard this one before, is the GPS metaphor. You can say something like this: “Think of me as the GPS for your financial journey. You couldn't navigate the route yourself, but having a GPS minimizes the risk of getting lost, saves time, and often introduces you to routes you didn't even know existed.” [11:04.0]

After using a GPS metaphor, a prospective client might come back to you and say, “Well, Mr., Mrs. or Miss Financial Advisor, I’ve used a GPS before and it's led me down the wrong path. How do I know you won't do the same?” So, if a prospective client raises concern about the GPS metaphor by saying it's led them down the wrong path before, then you could respond with “Great point. It's true that no tool is infallible, GPS included. However, the value of a GPS and, by extension, a financial advisor, lies in its ability to adapt and recalculate the route when you do go off course. If you make a wrong turn, the GPS doesn't just give up. It quickly assesses the situation and provides a new route to get you to your destination. Similarly, financial markets and personal circumstances can change, and part of my role is to help you adapt your financial strategy accordingly. I can't even promise to eliminate all risks. I can't promise a guarantee of a certain outcome. But my expertise and my ongoing guidance can keep you as close to your financial goals as possible, even when life throws curveballs your way.” [12:08.7]

That response acknowledges the client's concern. It doesn’t just try to sweep it away or go over it or under it. It just acknowledges it. It answers it, but it also reinforces the value of having professional guidance. It reassures the client that the advisor’s role is not just about setting an initial course and then letting you figure everything out yourself, but it's also about making ongoing adjustments to adapt to changing conditions.
Another metaphor I like is about fitness and it goes like this. “Just as a fitness trainer helps you achieve your physical goals faster and more efficiently, I'll help you reach your financial goals with tailored advice and constant monitoring.”
Then there's also the house-foundation analogy. “Investing in financial advice is like investing in a solid foundation for your house. It might be a significant cost upfront, but it saves you from much larger potential losses in the future.” [12:59.7]

There's also the garden analogy. “Managing your finances without professional help is like tending to a garden without knowing anything about soil, seasons, or irrigation. Sure, some things might grow weeds, but you'll miss out on the full potential harvest.”
Then I like the recipe analogy, too. “Having a financial advisor is like following a well-tested recipe. You could try to cook without a recipe, but the end result is more predictable and usually much better when you have guidance.”
Another way financial advisors can overcome price and fee objections is by highlighting where the prospective client is already spending money, or where the prospective client will likely spend money on mistakes he or she will make. For example, a simple allocation adjustment can save tens of thousands of dollars on taxes.
But let's bring it back to real life, the everyday spending habits that most people don't even think twice about. Where is the person spending money now? I mean, have you ever met people who have insurance on their cell phones, but no insurance on their lives? Crazy, right? It's an interesting paradox. They're willing to protect a $1,000 device, but not the income that allows them to buy that device in the first place. [14:08.0]

Or consider those who lavishly spend on dining out. They get meals loaded with butter and sugar, but they won't invest in disability insurance. They're essentially prioritizing short-term pleasure over long-term security. One accident, one illness could put them out of work, and without disability insurance, they could face financial ruin or, at the very minimum, hardship, unnecessary hardship.
Let's not forget people like tech enthusiasts. These individuals will eagerly spend thousands of dollars on the latest gadgets from smartphones to smart home systems, yet hesitate to invest in a comprehensive financial plan. The same amount of money it takes to outfit your home with the latest sound system is the same amount of money you could use to buy a financial plan, get some financial advice. It's ironic because that same amount of money, if invested wisely could yield returns that would allow them to comfortably afford these luxuries while also securing the financial future. [15:04.0]

So, when prospective clients balk at your fees, remind them, they're already spending money in ways that don't serve their long-term interests. By reallocating some of that spending toward professional financial advice, they're making an investment that could pay dividends, pun intended, of course—that's what I do here, I intend puns—for the rest of their lives. It's all about perspective and sometimes showing them that perspective, “You're already spending money,” is the key to overcoming their initial resistance to your fees.
There are so many other proven ways to handle price and fee resistance. I could do 10 hours of audio content on this topic alone, but I will leave you with one more high-level strategy. Make yourself the obvious choice for a specific group of people and then realize there is a scarce supply of you compared to how many people want and or need your services. [15:58.0]

In a free market, the economy is driven primarily by supply and demand. Something that people can get anywhere and everywhere is usually available for a low price. Something that scares is usually available at a much higher price, if it's available at all. There are a few hundred thousand financial advisors out there. If you're a CFP, then there's 95,000 others out there at the time of this recording. However, how many of those 95,000 certified financial planners work with your specific target market? How many of them solve the problem you saw?
Let's think about a completely different market because I’ve found that it's easier for financial advisors to internalize concepts when I step away from the financial advice industry. They can see it a little better. Let's say that you're a plumber in a major city, and for some reason, you're intricately familiar with plumbing systems in schools, just humor me here. Nobody has your knowledge. Nobody has your expertise when it comes to plumbing in schools in that city. [16:59.3]

Simply because you have narrowed your focus, you have eliminated competition and you can increase your price because there is a small supply of you to go around, and if schools want it done right from the beginning and they want someone who is intricately familiar with what they have, they're going to hire you. Even if other people try to make themselves available, they're going to go with you.
There's a lot more I could add, but I'm going to stop this episode here because I’ve given you a lot to think about this week. I hope this helps you. I’d greatly appreciate it if you shared this online or if you shared it with a friend directly. You now have a few price resistance tools in your toolbox. And I will catch you next week. [17:41.6]

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