Financial Advisory

Financial Advisory

Expert: Andre Lennon-Smith, PIMCO                                                                    pimco01.jpg

Facilitator: John Chapman, Owen James


There were some interesting views around the table on how best to communicate fees to clients.

  1. It was important for one firm to separate the charge for investment management with the advice fee. They thought that provided the clearest message to the client about what the fees are for.
  2. Some firms thought that the percentage fee based on assets was fair as it shared the gains and pains with the client. Other firms thought this type of charging was confusing and misleading.
  3. One firm advocates time recording for all staff. In that way, even though they charge project fees to clients, they fully understand whether or not work completed on behalf of a client is profitable for the business.
  4. It is also important to remind clients of everything that the firm does for the client. The advisor they see represents probably only 10% of the work the firm does. One firm has a 25 point card that lists “What we do for clients”. It is simple and effective, constantly evolved and as a result clients have an appetite to pay more for the service they receive.
  5. One firm uses cash flow modelling as a tool to demonstrate value. Clients enjoy the experience and take ownership of the model and the data within it.
  6. We should not be afraid of charging for our services. One firm uses the comparison with dentists and other professional practices who are not reticent in charging for their services – even though they may involve pain!