3 Essential Tools to Help You Serve Fee-Based Clients


Going fee-based is a big shift. Well, that’s actually an understatement. Going fee-based is really a wholesale change. To go from commission-based relationships to fee-based relationships, your compensation changes, the relationship you have with your clients changes, your mindset changes, your value changes and the service you provide your clients changes.

To help advisors get their arms around the changes involved in becoming a fee-based advisor, we break down the transition process into six simple steps. A high-level outline of the six steps that it takes to make the transition from earning commissions to earning fees is provided in our Fast Track to Fee-Based download.

In our Fast Track to Fee-Based download, we talk about the importance of how you service your clients under a fee-based structure. When you make the move from being a salesperson earning commissions to being a consultant earning fees, the way you service your clients is vital to the success of your transition.

With service in mind, let’s look at three tools and templates that will help you set expectations, discuss your service structure and foster happy client advocates:

Service Menu

Fee-based advisors can provide a ton of value to clients. The challenge for many advisors usually comes in communicating this value and its scope to a client. Advisors who can articulate and communicate their value can have very loyal clients who come to them for all of their financial decisions. Advisors who struggle to get their message across risk having their clients leverage their own network of relationships, potentially undermining the advice of their advisor while also cutting them out of potential revenue.

A Service Menu can help. A Service Menu is a great tool for describing what you are capable of providing guidance and advice on. It can also provide a list of the products and programs that you have access to.

A good Service Menu (like all of these tools) is best written in the client’s language, so avoid using too much industry jargon. A good Service Menu is also fairly specific. You’ll have to avoid using broad category terms that a client may think doesn’t apply to them.

For a great example of what you can put on your service menu, check out pages two and three of “How a Menu of Services Generates Revenue” by Teresa Riccobuono at Advisor Perspectives.

Service Matrix

After you define everything that you can cover with a client in your Service Menu, the next thing you need is a Service Matrix. The Service Matrix outlines all the services that your clients receive from your firm. It is also a place where you can differentiate your services.

Most Service Matrixes, for example, are organized according to a segmentation factor like assets under management. This makes sense since larger clients typically require (and demand) greater contact and access. Therefore, a service matrix gives clients with higher levels of assets greater access to the service, support and information they demand. Smaller accounts that aren’t as demanding in terms of solutions or planning needs should receive a level of service that meets their needs.

There are many examples of service matrixes online. For a good description of what to include in your service matrix, read “6 Steps to Create a Client Service Matrix” by Duncan MacPherson at Pareto Systems. Additionally, you can find a sample matrix on page 6 of TD Ameritrade’s “Advisor’s Guide to Client Segmentation and Service Models.

Service Agreement

The final essential piece to your fee-based business is a Service Agreement, which shouldn’t be confused with an Asset Management Agreement or other legal documents that outline the contractual nature of your relationship. Those documents are what your compliance and legal team (and the SEC) need in place to establish and maintain your relationship.

The Service Agreement is different. It isn’t a legal document, it is an agreement based on trust. It outlines how you will service your client and also what is expected of your client. A well-designed Service Agreement sets the rules of engagement as well as the expectations and priorities between you and your client. Your Service Agreement should align with and potentially reference your Service Matrix.

We prepared two sample Service Agreements so you can see how simple it is to create and use. Sample 1 contains the basics and Sample 2 expands on the basics to include your rules of engagement. Your Service Agreement should discuss how often you plan to meet, how the client likes to be communicated with and what planning priorities should be addressed first. You and your client should sign it, and it should become part of their file.

Over time, it is important to stick with the agreed upon meeting frequency, even if planning changes are not needed. Changes in a client’s life may impact their financial plan and your client may not know it. Additionally, the structured and recurring contact lets your client know you are thinking of them, and you can address any immediate concern they may have about their portfolio.

Service, Service, Service

If you haven’t noticed, all three of these essential tools share a common element. That element is “service.” A fee-based relationship is a service-based relationship (not a sales-based relationship), and how you provide service and how that service helps your client is your key deliverable. Customizing these three tools and templates for your firm will help make your transition to fee-based smooth and easy.