Heads up financial advisors! Literally, because burying your head in the sand isn’t going to cut it when it comes to discussing fees with your clients. CRM2 is not going away and unless you can afford to lose a lot of clients, you’d better start preparing them.
Rob Carrick of The Globe and Mail puts it bluntly, “unless client-advisor communications improve a whole lot, the introduction of new fee disclosure rules in July of next year is going to fry a lot of relationships.”
Recent research, based on input from over 1,000 investors with investable assets of $10,000 or more, confirms what we’ve always suspected, financial advisors are not eager to discuss fees with their clients.
More than 60% of those surveyed said they had not met with their financial advisors in the last 6 to 12 months to discuss fees. Those who did meet with their financial advisors less than half said they discussed the new transparency rules. Furthermore 31% of those investors with advisors thought they weren’t paying any fees for financial advice – clearly there is a huge disconnect.
Financial advisors who do not make a serious effort over the next year to meet with and inform their clients about fee structures and clearly articulate what they can expect in return, in terms of service – may be surprised when clients start walking out the door.
Of course this also means that they had better follow up and actually deliver service – gone are the days when an advisor could “plunk” a client’s money in mutual funds, send them a Christmas card once a year and call it a day.