This fees article was originally published in New Model Adviser
Online fee disclosure is a topic sure to cause heated debates among advisers and planners.
I remain on the fence. I can see benefits, especially in terms of transparency and openness. Equally, I can think of potential drawbacks.
Our research shows that only around a third of firms disclose their fees online. However, we’ve spoken to several recently who want to make it clear on their website exactly what they charge.
That’s a decision only they can make, but it’s led us to thinking about how it can be done most effectively.
First things first, while it’s probably not possible to give an exact fee for every potential scenario, the fees disclosed must be specific enough to be meaningful to the consumer. Ideally, they should be simple to explain too. That might be the catalyst for some firms to revisit their structure!
Context is everything
Too many firms (trying to do the right thing) display their fees in isolation. That’s a mistake in our view, and needs to be put in context to demonstrate value.
The ultimate contextualisation would be to compare your fees (and the value you provide) to your peers. This isn’t particularly easy though, not least due to a lack of data. The FCA Data Bulletin of October last year provides some broad estimates; but it does rather emphasise my point about the importance of being specific.
It’s also vital that the fees are displayed alongside a detailed explanation of the services that you provide. And, crucially, the benefit they receive and the value you add. There’s plenty of research around from the likes of Unbiased to show the value of advice and that’s something we’d recommend including on the page. So are case studies, written to show the benefit and value of working with you.
If you charge fixed fees, we recommend a more detailed explanation; the consumer could perceive a fee of a few thousand as ‘large’ compared to a ‘small’ percentage. In reality of course, a fixed fee may well work out to be substantially more cost effective. If you’ve made the decision to charge fixed fees, the evidence shows it separates you from other firms, it’s worth therefore also explaining why you have taken the decision to charge in that way.
Likewise, if you charge hourly rates, explain why and give some broad examples of the cost for different types of work.
Include client testimonials or reviews on this page too (indeed we’d argue they should be included on most pages on your website) to demonstrate that clients are happy with the value you provide and the fee you charged.
Don’t hide your fees
Make the fees easy to find (you don’t want to look like you’re hiding something) and simple to understand.
Don’t just upload your fee agreement and think that’s job done. It isn’t.
Think about how the page flows, and where the information is displayed. If your fee structure allows, you might consider developing an online calculator to allow the consumer to calculate the fees payable for their circumstances.
Finally, be approachable
Make it very clear that you are available to answer any questions a potential client might have. Prominently display your telephone number and give an email or contact form option too, which can be used if they prefer a less direct approach or it’s out of hours.
I can see both the advantages and disadvantages of online fee disclosure. The decision is for you to take, based on your beliefs and what’s right for your business, but if you decide it’s for you it needs to be given significant thought and executed with care and attention.
If you need help then please get in touch.