Explaining fees for financial advice before anybody asks

Aug 29
3 min read

Updated: 2 days ago

Introduction

A prospective client looks at four adviser websites. Three describe an initial consultation at no obligation and say nothing about cost. One sets out an initial charge, an ongoing charge and what each covers. The prospective client can only evaluate one of them.

Fee transparency is now expected and it is still handled with visible discomfort across much of the profession. The awkwardness is understandable — charges are genuinely varied and depend on circumstances — and it costs enquiries, because a client who cannot establish what something costs generally assumes it is more than they can afford. The cautious prospective clients are precisely the ones a practice most wants to reach.

1. Explaining fees for financial advice starts with publishing something

Silence is not neutral.

A range, a starting figure, or a worked example is enough for somebody to decide whether to make contact. A website with no figure filters out cautious people rather than attracting them into a conversation.

2. Separate initial from ongoing clearly

Two different things clients confuse.

What the initial work costs, what the ongoing service costs, and what each includes. Clients frequently misunderstand ongoing charges entirely, and the misunderstanding surfaces at the point they consider leaving. By then it is being examined by somebody who has already decided to be sceptical.

3. Show it in money, not only as a percentage

Percentages obscure the amount.

A percentage of assets is normal and it is not how people experience the cost. Giving the actual sum for a typical case, alongside the percentage, is both clearer and more honest.

4. Explain what the ongoing fee buys

The charge most often questioned.

Reviews, rebalancing, availability, administration and reporting, described specifically. An ongoing charge with no articulated service attached is the one clients query, and increasingly the one regulators do too. An ongoing charge attached to no describable service is a well-known area of scrutiny.

5. Include the costs that are not yours

Total cost is what the client pays.

Platform charges, fund charges and any transactional costs, alongside your own. A client who discovers additional layers later feels misled even when everything was formally disclosed somewhere.

6. Follow the disclosure rules precisely

A regulated matter with prescribed requirements.

How and when charges must be disclosed, in what form, and what must be provided before advice is given. These vary by jurisdiction and are not optional; confirm what applies to you and build it into the process.

7. Have the conversation early

Not at the end of the second meeting.

Raising fees in the first conversation, before substantial work has been done, is more comfortable for everybody. Clients who discover the charge after investing time feel the discussion was avoided deliberately.

8. Be able to justify it plainly

Value in the client's terms.

What the advice is expected to achieve, the mistakes it avoids, the tax and structural decisions, and the time and worry saved. This should be articulated in ordinary language rather than by describing your qualifications.

9. Do not discount quietly

Inconsistency creates a problem.

Ad hoc reductions produce a book where similar clients pay differently for the same service, which is difficult to defend to clients and increasingly to regulators. A clear structure, applied consistently, is easier in every respect.

Review your charges periodically and explain any change properly, in advance. Clients accept increases that are explained and resent those that appear on a statement, and the second is a common reason for a long-standing client to review the whole relationship.

Conclusion

Publish something rather than leaving prospective clients unable to evaluate you.

Separate initial and ongoing charges clearly, express them in actual money as well as percentages, describe specifically what the ongoing fee buys, include platform and product costs so the total is visible, follow your regulator's disclosure requirements precisely, raise fees early rather than after substantial work, justify the charge in the client's terms rather than through your credentials, avoid inconsistent discounting, and explain any increase in advance.