Business News

ROI key to pricing discussion

Emphasising the benefits of advice as a return on investment (ROI) to clients rather than focusing only on the cost was a more effective way to overcome any pushback, a specialist business has said.

“When you present your advice fee, how many of us call it a fee or a cost?” SMSF Design chief executive Tracey Besters told the SMSF Conference convened by ARC Super, NowInfinity and WPIAS Training in Queenstown, New Zealand, on Thursday.

“Instead, we need to start thinking about it in terms of being an investment.

“You want your clients to think of it just like they would make an investment in a product and that investment will return something to them. We want advice to be the same, so your communication and your language need to encompass the term ‘investment’ because we also want to be able to calculate what the return on that investment is.”

Besters said advisers needed to calculate the benefits as well as the investment in order to make it easier to come up with the ROI calculation.

“Once we know what the benefits are and we’ve calculated those benefits and the investment, then it’s a simple ROI calculation,” she said.

“If you’re able say to your client ‘this investment is going to be $10,000, but you’re going to make $150,000 over the next five years’, it’s a totally different decision-making process for the client than it is to simply say ‘my fee is $10,000 for a transfer of property’, for example.

“It changes the ballgame.

“Your clients understand ROI because they know what it’s like to make an investment in something, so that’s why we have to change that [approach].”

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