An RIA client in Florida recently told me about a client situation that was really bugging him. This client had willingly transferred with him when he went independent from Schwab six months ago. At Schwab he had paid less for a mutual fund than he was now paying on the new platform, however he is paying less in other fees and getting much more attention. My client explained that overall he was actually paying less. The client just couldn't put his head around the concept and was doing far too much complaining.
Why do cheap clients want services for a lower price? Do we shoot ourselves in the foot when we take on clients who don't value our expertise? Are cheap clients more work?
Cheap clients tend to want their "money's worth" which translated can mean working you ragged. Many cheap clients don't feel satisfied until they've raked you over the coals because it's just in their nature. They tend to be more work because they are never satisfied.
Whether you're an advisor or small business owner, my advice is to always be up front about what you charge for a product or service. When billing issues are clear, there can be no dicey situations. Clearly spell out what you provide and how much you charge. Don't let clients get away with getting more services, more time, and more effort. Because once they get more for less, you will be forever dancing around like a puppet trying to keep them happy.
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