Free is Never Free & Thoughts on Discounts

Free is Never Free & Thoughts on Discounts

I’m writing this as I sit in a car dealership awaiting my wife’s vehicle. When we purchased the car, one of the advertised benefits of purchasing the car here was the free “car services” that were thrown in with the purchase of the vehicle.

Essentially, free inspections and free oil changes.

But, they’re definitely not free services. Because what seems to happen each time you bring the car in is they want to notify you of things that are either already going wrong with the vehicle or of things that are about to go wrong with it. In other words, something they can charge for.

I’m sure there is some truth in the “recommendations” being made, but I doubt it’s to the extent of what is being told to us. The truth is, free is never free. The biscotti, coffee, wifi and fancy furniture doesn’t pay for itself.

It’s the same in our industry. The advisor who doesn’t charge you anything but sells a life insurance policy to cover your needs. Believe me, you paid; you just don’t know it or at least don’t know how much. Zero-fee ETFs or commission-free trades a la Robinhood are all the hype right now. They’re “free” but make no mistake, there is a catch. There always is.

Discounting isn’t all too different. A couple of months ago, I was asked by a prospective client if I would consider discounting my fee. I politely declined. I thought about writing a post about it then but didn’t. Since I’m sitting in a car dealership, the timing feels right to share some thoughts on it now.

It’s no secret in my advisor study group that I don’t believe in discounting fees, regardless of the value of the prospective client’s accounts. I just don’t think it’s the right thing to do for two reasons.

First and most importantly, it wouldn’t be fair to my current clients. Many of my clients have been with me for years and have never once haggled over the fee they pay for our services. Should they pay more than a new client simply because they’ve never haggled me about it? Absolutely not! That would be wrong on multiple levels. I appreciate their loyalty to me as their advisor far too much to do that.

Secondly, if I believe I charge a fair price for my planning services, why discount them? It doesn’t seem to add up to me. The only reason an advisor would be willing to discount their fee is if it was too high to begin with. Thinking of it that way, do you really want to work with an advisor that is willing to negotiate?

Lastly, I don’t want to go down the negotiation route because where does it end? If it’s negotiable once, is it negotiable again down the road? Or are the fees always going to be in question regardless of how much time, effort and value I bring to that client? Seems like an easy way to cloud the relationship from the start.

Given those issues, I don’t think that discounting my services is the best way to set the advisor/client relationship up for future success. I’ve never claimed to be and never will claim to be the low-cost producer of retirement planning services. I’m sure I’m not the right fit for everyone and I’m okay with that.

I’m not trying to bring on the most clients, but a limited number of the right clients. Clients that want a personal, multi-decade partnership with someone they trust and actually want to be around for all those years.

Yes, this is a business and one in which clients pay me for, but it’s far more personal to me. Clients invite me into their home; I share in the growth of their family, the fulfillment of their retirement dreams, and more. I’m also there when life isn’t going so well, and I’ll consider it a privilege, not a business obligation, to be there for them whenever they need me. I am far from perfect, but I give my clients everything I have both personally and professionally and I love doing it. But the truth is, I can only do that for so many people. In this way, I am investing in them by choosing to walk with them over a thirty-year retirement and they are investing in me.

In essence, my clients hire me because they want to delegate their retirement finances so they can worry less and enjoy themselves more – and they are willing to pay a fair price to accomplish that. It’s not for everyone, but for the people it works for, I think they’re happy to have a lifelong partner in their corner looking out for them every step of the way.

Long story short, I just don’t think you get the types of relationships I’m looking for and one I think the right type of client is looking for by leading with free or with discounts. If you think about it, there are very few free or discounted things in life that are worth what you have to pay to get them. I hope this all makes sense.

Thanks for reading!
Ashby Daniels

I am a Financial Advisor in Pittsburgh that specializes in working with people transitioning into retirement. If you’d like more information, see Who We Serve. Or to contact me, go here.

Disclaimer: Any opinions are those of Ashby Daniels and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Expressions of opinion are as of this date and are subject to change without notice.

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