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May 11, 2007 1:36 pm

If you get a hold of someone thru a cold call and find out the type of investments they are interested in, how do you figure your fee out for the initial trade on the account?  We have built up repoire and have emailed back and fourth a few times already. 


This is not a bond sale where the commission is inside and I know he uses a discount broker like ameritrade or etrade.  I don't want to run him off but normally I would expect 1.5% for anything of 200K and smaller.


What would you do?

May 11, 2007 1:52 pm

Tell him you expect 1.5% for anything 200K and smaller.

May 11, 2007 1:54 pm

LEAP-not trying to be an a**, but if you feel this is fair and you run
your business this way, why bend the rules?  If you are that
unsure, maybe you need to change your guidelines across the
board.  Don't just say 1.5% for "x" if you cannot justify it in
your mind.  Don't be wishy washy either, clients don't want that.

May 11, 2007 2:59 pm

don't discount to win new business....it sets a bad precedent for your future behavior and affects how the client perceives you...

If you are worth that fee for OTHER clients, you are worth getting paid by this guy too.  How would your other clients react if they knew you gave this guy a break?  How are you going to handle it when he refers his brother in law to you and he wants the same discount?

Once you start discounting to bring in new business it's a slippery slope.

May 11, 2007 4:22 pm

Good Point Ironhorse - I don't really want to compete with a discount broker if the client isn't going to appreciate my services anyway.

May 11, 2007 6:18 pm

Whenever I have a prospect question fees, and they make the comparison to disoc**ters or fee-only guys, I always bring up the fact that the fees encompasses EVERYTHING that we do. Such as the investment planning, the analysis (retirement, college funding, etc, etc), the monitoring, service, etc.


When you position the fee as an 'all inclusive" arrangeent hopefully they can see the value in that...

May 11, 2007 6:29 pm
blarmston:

Whenever I have a prospect question fees, and they make the comparison to disoc**ters or fee-only guys, I always bring up the fact that the fees encompasses EVERYTHING that we do. Such as the investment planning, the analysis (retirement, college funding, etc, etc), the monitoring, service, etc.


When you position the fee as an 'all inclusive" arrangeent hopefully they can see the value in that...



If they say your fee is high, agree with them and ask them why they think it IS so high. They will probably come back with what THEY think is a good reason to charge higher fees. Whatever they come back with, tell them "that's it."

May 11, 2007 7:04 pm
LEAP:

This is not a bond sale where the commission is inside
and I know he uses a discount broker like ameritrade or etrade.  I
don't want to run him off but normally I would expect 1.5% for anything
of 200K and smaller.


What would you do?





Just say that I normally charge an account set up fee that covers,
(list value added services) of 1.5% for anything of 200K and smaller.
And then ask if that is ok with the client.

May 14, 2007 11:40 am

I haven't always refused to give a discount, but I have always regretted it when I gave the discount.


Full disclosure:   I am currently trying to convert some clients to fee based, so I have set my fees lower than I think I should for the first few of the bigger clients.  I fully anticipate regretting that decision in the future, but for now I just wanted to get my feet wet with fee based.