RDR – Tackling adviser charging

RDR – Where to start with adviser charging


The big noise with RDR is the shift to charging for advice. It’s the bit that everyone is getting jumpy about. The thing is, it’s not as simple as replacing commission with fees. There are a whole bunch of things to consider, as anyone who has voluntarily made the move will tell you.

In this post I want to give you some tips on starting the process.

Before you can start thinking about how you are going to do this, how much to charge and how to collect it, you are going to have to get some clarity about some important things. If you skip this bit, you’ll be back doing it later. I promise you will… so don’t skip it!

What, exactly, is it that you do?

More to the point. What do you currently get paid to do? Firms are at various stages between pure product distribution for commission, gathering assets for investment management and financial planning. What you currently get paid to do, is an important issue. Is this sustainable in the future? Personally, I believe financial planning is the way forward, but you need to get comfortable in a financial planning mindset, and not everyone is. Commercially though, you need to be very clear about the value you add because you will have to explain it.

There is a supplementary question which is even more important in my opinion, but possibly harder to articulate.

Why do you do what you do?

In his book, “Start with Why”, Simon Sinek argues that the greatest businesses start with a cause or belief that is central to the work they do. If you can get clarity here, it will really help you later on in the process.

My “Why?” is that I’m trying to re-define the financial planning experience, because I think advisers who sell products or investment strategies without a proper financial planning experience are going to struggle in the future. Actually, there’s a slightly deeper “Why?” and it’s not about advice firms.

I believe there’s more to people’s lives than chasing money, and firms that  deliver lifestyle financial planning make a real difference in their clients’ lives. If more advisers delivered a client experience that knocked their clients socks off, clients would get a great ‘product’, advisers will get properly paid, and we won’t get any hassles from the regulator. Surely, that’s worth getting out of bed for!

The reason this clarity is important, is that it will form the foundation that you build your service proposition on. In other words, you need to build your own product, not sell someone else’s.

If you’re finding it tough to identify your “Why?”, take a trip back through your life and recount your story. There is something that makes you who you are. There are experiences that have caused you to believe what you believe. We need to get that out, because what you believe, is central to the business you create, the people you serve, and the employees that help you deliver it. That’s where great businesses come from.

Have you ever worked in a business where you just weren’t on the same page as your colleagues, or the management? I have. It’s not a pleasant experience.

If you want your business to succeed, you need a great proposition. And that starts with who you are.

Who do you work with?

Next, you need to think about your ideal client. What’s that?… Lots of money, you say. Maybe, but maybe not. Most client segmentation work starts with categorising people by how much money they have. “Gold” clients have more than X, “Silver” clients have more than Y, and “Bronze” clients are anyone with less. Since “Gold” clients have all the money we then try and fill the “Gold” service with more stuff to try and justify the significant fees these clients will pay… irrespective of whether the client values those things, or whether we really believe they add any value.

Does your client want a monthly/quarterly investment statement? Do you believe that having your client emotionally reacting to rises and falls in his portfolio on a monthly/quarterly basis is adding any value for him?

Is the client the client, or is the client’s money the client?

It makes no difference to me, but in my experience if you want all the money, you still have to focus on the client… You are client-centric aren’t you? The client comes first, right?

The word we are looking for in all this is “Congruent”. It all needs to hang together. Your message needs to be a message that works for you, gets you out of bed in the morning, and fires up your team. It also needs to resonate with your clients. If they don’t feel it, or they don’t believe it, you are going to have a harder time getting them to pay for it!

Many advice firms think they need to fill the sales funnel with more people. Find new prospects! The more we throw at the wall, the more will stick. Fine if you want brown walls! Not fine if you want a business with the right clients getting a financial planning experience they really value. The question is not “How many people can we see?” The question should be “How many of the right clients do we need?”

If your proposition is to be high touch, high engagement, delivering lots of value, then you can’t deliver that to the 2000 people you have on your database, that you loosely call ‘clients’. If your proposition is to be low engagement and relatively basic (and much cheaper) you will need more clients and be able to service more. I don’t think a professional financial planner and his/her team can properly service more than around 150 clients. For some it might be 100, for others it might be 200. It depends on what you do, and it depends on what sort of a life you want.

There needs to be a good fit between these ratios. It needs a balance.

I strongly believe in focusing on a narrow niche and becoming a specialist there. The ‘go to’ firm specialising in advice for recently widowed women, for example. If you can find something like this in your “Why” then it will really help. Most firms struggle with the idea that they should restrict the range of people they work with. I understand that, when historically, anyone with a pulse was a prospect. If you are going to keep your ideal client definition wide open, then you will probably find it difficult to manage multiple propositions and fee scales, as you try to be all things to all people. I believe that one of your great advantages as a small business is that you are small, and specialist. If your proposition is good, this gets you noticed. Leave ‘all things to all people’ to the big guys who will deliver, at best, mediocrity.

Client surveys

At this point, it would be a good idea to have conversations with your existing clients and get some feedback on what they love about working with you, and what’s missing from your current proposition?

This could be informal discussions, it could be a formal survey or it could be that you invite a group of clients to a lunch meeting to have a group discussion. The purpose of the exercise is to get good feedback on what problems they are facing. Most surveys focus on customer satisfaction. Banks are notorious for asking stupid questions like “Did we listen to you today?” Please… I’m not 5 years old. “Would you recommend us to your friends?” Seriously? You can’t deliver a basic service and you want to go straight to getting referral business? The problem with big companies is that they just don’t listen. And that is where you win!

Clients are vital in the process because, guess what, they are the ones that are going to perceive value in your services and be asked to pay for it. As well as getting good feedback, it will demonstrate that you are listening to your clients, and they appreciate that.

Your job will then be to design a solution that addresses the problems they are facing.


I’ll leave the marketing issues for another day, but what I want you to do is gain some awareness for what messages are currently being delivered through financial adviser websites. Go and check a few of your fellow advice firms. Do you understand what they do? Do you get a sense of their “Why?” Is it compelling?

Adviser charging doesn’t start with adviser charging. That comes much later.

My personal experience of advisers I know well, is that financial planning firms that have good clarity about what they are really doing, and why, have found RDR and adviser charging to be really no big a deal.





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