Strategy and marketing consulstants Simon-Kucher published research paper Nothing to Lose: Pricing for the Next Generation of Wealth Management Clients earlier this year. This guide on how to price for the new financial services client and environment says that to capture younger clients, firms need to let them (1) See what they get; (2) Choose what they want; and (3) See what they will pay. Discussed below is how to effectively offer service choices.
From the report:
Having a series of options is an effective way to address a market that consists of clients with broadly similar needs that differ in certain key regards, such as amount of desired face-time with an advisor… The absence of choice in wealth management is a glaring omission in an age of consumer empowerment and the Internet. It is also an unforgivable one if we consider that some clients may have never known anything else.
The all-in AUM% fee model puts advisors in a bind when it comes to offering choice. Since all services are—in theory—included, the only aspect of the offer that can be altered is the fee itself, and the only direction it can be altered in is down.
If effort is circumscribed by different packages or service levels, with corresponding price points to reflect the difference in effort and value, less demanding clients can self-identify, and so free up time for higher paying clients.
Offering choice naturally allows clients to see better what they are receiving, through the addition of a reference point.
[Following] is an example of a choice-based proposition, from Spillane Financial Planning.
Source: Nothing to Lose: Pricing for the Next Generation of Wealth Management Clients, Simon-Kucher & Partners