• Home
  • About
  • Contributors
  • Write for Us
    • Submit Your Content
  • Discounts & Resources
  • Education
  • Advertise
  • Contact

Women on Business

Business Women Expertise, Tips, Advice and More to Build Winning Careers and Brands

You are here: Home / Finance / 3 Reasons to Refuse Your Financial Advisor’s Discount

3 Reasons to Refuse Your Financial Advisor’s Discount

December 13, 2020 By Clare Baukham

financial advisor

Discounted advisors are like cheap clothes, they look good in the store and then they fall apart after one wash aka a market crash.

Years ago, I sat across from a then retired financial advisor who was questioning the fact that I never discount the price of what I do for clients. I asked him why he did discount the advisory fee. He said that it was more competitive.

But shouldn’t the competitiveness come from the value you offer clients? More on this later.

The fee you pay is called a Management Expense Ratio (MER). If it’s a 2% fee, 1% is going to the fund company and the other 1% is being shared by the firm and your advisor, typically.

Advisors sometimes offer a discount on their portion of the fee in order to make working with them more attractive. As the retired advisor said, “to make sure they stay with you.”

I don’t want a client to just “stay with me.” I want them to thrive.

Here’s why you want to pay the full amount to your advisor:

1. You Don’t Want the Cheapest Financial Advisor on The Block

Getting the discount feels good up front, and you can boast to all of your friends that you got something for cheaper.

But, ask yourself, why is this person devaluing their work? Are they not going to do the job as efficiently?

Maybe they don’t have as much confidence in what they do, so they discount in order to make their work more attractive.

2. The Baseline of Value

This is what I referred to above. Okay, so if you pay 1% to your advisor, for example. Do you want them discounting to .5% and doing 1/2 a percent less work for you?

Give them the 1% and let them do their proper job for you. Otherwise, you may get shuffled into the “who cares” pile of clients. Sad but true. I’ve seen it live.

3. It Shows Your Advisors Confidence

Your advisor not discounting shows that they are confident in what they do and can achieve for you. I’m certainly not referring to cockiness here – the financial industry is chock full of that, thank you Gordon Gekko and The Wolf of Wall Street. I’m talking about humble confidence.

When your advisor meets with you, they should be noticeably clear on what you should be doing in order to achieve your goals. They should have practiced their craft after business hours for years. It’s called mental laziness or mental activity. You want someone who is constantly active and figuring out the best way for you to win.

Make Sure Your Financial Advisor Passes the Test

The way fees usually work is that your advisor will be paid the same percentage whether your account is up or down. So, if your account goes down, they get paid less, and if it goes up, they get paid more. This is a great incentive to keep your advisor accountable for your money.

The next time you meet with your advisor, try to gauge their confidence levels. Are they fumbling around? Not sure how to answer certain questions?

I know advisors who make the client pick their own funds. How are you supposed to know what to pick? Isn’t that what you hired us for?

As long as they pass the tests, pay the fee. By paying more, you’ll actually end up much wealthier in most cases. Remember, cheap clothes look good on the rack and look ragged after one wear.

Clare Baukham

Always against the grain and outside the box, award winning financial advisor Clare Baukham obsesses about money day and night for not only herself but for the very hard-working business owners she serves. Every business Clare has started was from a love of money and how to make it, so naturally, when she came into the financial services industry, she knew she found the missing piece to her obsession. Money can’t buy happiness, but it buys a lot of comfort and security.

More Posts

Follow Me:
TwitterLinkedIn

Filed Under: Finance Tagged With: Finance, financial advisor, investing

Sponsors

DHgate - Do business with China wholesalers online

Freebie!

Join Us!

Recommended Reading

ultimate guide to email marketing

Awards & Recognition

Categories

  • Board of Directors
  • Books for Businesswomen
  • Business Development
  • Business Executive Team
  • Business Travel
  • Businesswomen Bloggers
  • Businesswomen Interviews
  • Businesswomen Profiles
  • Career Development
  • Communications
  • Contests
  • Corporate Social Responsibility (CSR)
  • Customer Service
  • Decision-making
  • Discounts & Offers
  • Education
  • Equality
  • Ethics
  • Female Entrepreneurs
  • Female Executives
  • Female Executives
  • Finance
  • Franchising
  • Freelancing & the Gig Economy
  • Global Perspectives
  • Health & Wellness
  • Human Resources Issues
  • Infographics
  • International Business
  • Job Satisfaction
  • Job Search
  • Leadership
  • Legal and Compliance Issues
  • Management
  • Marketing
  • Networking
  • News and Insights
  • Non-profit
  • Online Business
  • Operations
  • Personal Development
  • Politics
  • Press Releases
  • Productivity
  • Project Management
  • Public Relations
  • Reader Submission
  • Recognition
  • Resources & Publications
  • Retirement and Savings
  • Reviews
  • Sales
  • Slideshow
  • Small Business
  • Social Media
  • Startups
  • Statistics, Facts & Research
  • Strategy
  • Success Stories
  • Team-Building
  • Technology
  • Uncategorized
  • Videos
  • Women Business Owners
  • Women On Business
  • Women On Business News
  • Women On Business Offers
  • Women On Business Partners
  • Women On Business Roundtable
  • Women on Business School
  • Work at Home/Telecommute
  • Work-Home Life
  • Workplace Issues

Authors

Quick Links

Home | About | Advertise | Write for Us | Contact

Search This Site

Follow Women on Business

  • Facebook
  • Pinterest
  • Twitter
  • YouTube

Copyright © 2023 Women on Business · Privacy Policy · Comment Policy