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How to set boundaries with clients and friends when they become 'freebie-seekers'

Establishing where free ends and fee begins can be challenging, but learning the art of declining gracefully is essential to focusing on what's important in your practice

Monday, September 17, 2012 – 4:50 AM by Guest Columnist, Maria Marsala
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Maria Marsala: My standard answer is: 'That will be a cup of coffee -- in Italy, please.'

“So, you’re a financial advisor … have any hot stock tips? What should I be buying? Can I take you out for coffee, pick your brain, and get your opinion on my portfolio?”

Sad but true, you’re probably shaking your head, rolling your eyes, or chuckling knowingly to yourself. If you only had a nickel for every time someone asked you for free, off-the-cuff advice, right? But be honest — how often do you set aside your reluctance, give in to a sense of obligation and actually answer the questions?

Even though I haven’t been a Wall Street trader for many years, the questions about tips never stop coming. As a business advisor, at least twice a week I’m asked out for a cup of coffee because the person wants to pick my brain. My standard answer is: “That will be a cup of coffee — in Italy, please.”

Take heart — you’re not alone. As long as you’re in the financial arena, you’re going to be asked to work for free. Financial professionals endure a specific set of boundary-crossing issues. Timothy Yee, a corporate/non-profit retirement planner from Green Retirement Plans Inc., says this about the people I call “freebie seekers”: “It is amusing to be asked if they can buy a no-sales- charge/ultra-low-expense fund through me and not pay me for my time. I can’t imagine the same person going to a doctor and asking to fix a broken leg for free. Why has financial planning allowed itself to be turned into a commodity?”

Why indeed. And these requests don’t always come just from friends but from current clients. I’ve known advisors to take on the extra-mile tasks of mediating family feuds, buying cars, researching colleges, and selling homes for their clients — all for free! While these may be extreme examples, it is the everyday, “innocent” requests that rob you of big chunks of time. See: The art of breathing: How to handle the overwhelm of being a financial advisor in 2012.

Please note, I’m not saying you must never provide free information or services to prospects and clients. Setting professional boundaries means striking a balance between everything you could provide for free and what you’re in business to do — and charge for.

Free vs. fee

It’s difficult to say no to people because we don’t want to disappoint them. We choose careers in the financial industry not just to make money (as much of the media claims), but to help others. We want our clients to achieve their business, personal, family and retirement goals. We want to provide impeccable customer service, too. But at times, our own fear of rejection keeps us from rejecting others’ requests. Wouldn’t it be great if saying yes guaranteed that we’d get a yes in return when we want to manage more assets? Alas, we know this isn’t always the case. See: 10 indispensable questions for advisors to ask — and 10 to answer — at networking events.

Saying no might feel selfish or violate your definition of good service; however, neglecting to set professional boundaries will hurt your ability to help the people who will benefit from your services the most. Creating clear boundaries between “free” and “fee” gives you more time to attract and work with your ideal clients.

Relationships with prospects start when you invite them into your company’s marketing funnel with an offer of free and helpful information: informational brochures, a book list, an audio you’ve produced, or referrals to other advisors who can better assist prospects who aren’t the best fit for your firm.

Paula Harris, co-founder of WH Cornerstone Investments LLC, a fee-only firm, described an incident where a family with no active contract declined a meeting when they heard their personalized consultation would not be free. She concluded, “It told us all we needed to know — they were not relationship-oriented and not a fit for our firm.”

Your ideal “AAA” client makes a financial obligation, but also an internal commitment. He or she has decided to transition from stranger to prospect to client because you’ve built a relationship. Such clients have grown to know, like, and trust you and your firm. When you help them overcome obstacles or achieve goals, you serve them and everyone else who touches their lives. Spending most of your time with these clients not only yields the best results for them, but the most fulfillment for you. See: 10 reasons for advisors to just say no to less-than-ideal clients.

How to decline gracefully

Every year, during your planning week, it’s important to get your team together to review and redefine where “free” ends and “fee” begins. Of course, you want to create value for prospects. But remember, being in business means earning a profit, and it’s hard to be profitable when you’re giving away the store.

It’s helpful to create a message, in your own words, that you can retrieve whenever you have to say “no” to someone who has requested something outside your professional boundaries. Get comfortable with the wording of your “no” statement for when you must deliver it in person. Prepare a version for e-mail, to which you’ll make adjustments for individual situations. Regardless of delivery mode, always reply with respect, knowing you are serving yourself and others with integrity.

Here are some examples to get you started:

“Are you looking to hire a financial advisor? I’d love to talk to you about that. Our fee for an initial consultation is ____. “

“Yes, I do work with clients on [name the issue]. Would you like to set up a consultation? Our rate is ____.”

“Well, the answer to that question depends on many variables. Would you like to set up a time for a consultation? We charge a flat rate of ____.”

“A complete answer to your question is going to take more than a few minutes over the phone. Let’s set up a ____ on ____. Are you available? Our fee for this service is ____.”

“I have really enjoyed talking with you and would like to help more. May I send you one of my brochures — I’ll include our fees?”

“I can give you five minutes.” When the five minutes is up — and you should time it on your watch — say something like: “This is really something that we should spend more time on. When would you like to schedule a more in-depth consultation? Our fee is ____.”

Action steps

Look at where you’re expending a lot of time and energy because you aren’t saying “no” appropriately. These areas are leaking profits as well as time. List areas where boundary issues arise and calculate the cost to your firm. Do you want to continue saying “yes” when these issues arise? Can your assistant, manager or another advisor handle these client situations? If you’ve realized that having few boundaries is taking a bite out of your bottom line, create at least three “no” statements for your firm — and make them a consistent part of the way you conduct business. See: How a change in mindset and business structure can get you off the hamster wheel.

Maria Marsala is passionate about helping independent financial services firms tackle strategic planning, master marketing, multiply the bottom line and increase free time. To book Maria as a speaker or consultant your team will thank you for, call (360) 271-8418. Subscribe to FOCUS!, Maria’s complimentary business growth e-zine, or request a complimentary 15-minute Breakthrough Session with Maria at Elevating Your Business

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