Does Monthly Pay Mean You Have to Talk with Your Clients Monthly?

4 min read
July 02, 2014

Many people go through life paying for things as they utilize them. For example, you pay your cell phone bill in March to provide you access to a phone line in April. You pay your gym membership on the 1st the month so you can utilize the facility for the next 30 days. And so on.

When it comes to the monthly pay model so many young planners are now utilizing, things are slightly different. Just because you charge clients monthly, you don’t necessarily have to speak to them each month.

In fact, this type of system provides many benefits for the clients if communicated correctly by the advisor.

How Clients Can Benefit from the Monthly Pay System

One of the biggest barriers to entry for young clients when working with a financial planner is the lack of immediate, tangible proof that this service can provide.

Think about it this way. If you were asked to put up $2,500 for a service that might help you somewhere down the road, wouldn’t you be hesitant to commit?

Add to that the ridiculous language we have to use to avoid the “guarantee trap,” and you are faced with a big dilemma. You know the language I’m talking about... the type that forces us to have this conversation with prospective clients:

Prospective Client: What can I expect to see after a year of working with you? What will I have to show for spending my hard earned money on a financial plan?

Financial Planner: Well, I can’t guarantee anything, really. What I can say is that by creating a plan today, you might have a better chance of possibly achieving your goals.

Prospect: So, let me get this straight. You’re telling me that if I choose to work with you, then it’s possible that I might be financially successful, but you can’t guarantee that I would be any better off than doing it myself?

Financial Planner: Sort of. Our industry forbids us to use promissory language, so we use words like “might,” “may” and “potentially” way too often.

I love using extreme examples, but I think you get my point.

The great news about a monthly fee is that it’s flexible and it breaks this payment down into easy-to-handle payments. Rather than paying $2,500 upfront, the client can pay about $200 per month.

In essence, the monthly pay model takes the typical annual or quarterly planning fee and breaks it up even further for the benefit of the client.

Plus, there's no commitment. So, if the client doesn’t find value in the relationship, he or she can back out at any time. How’s that for flexibility?

In the past, clients (and advisors) may have balked at such a payment method, thinking that writing checks every month would be a burden. Well, thanks to technology, there are several ways to automate this process these days, allowing clients to set up their monthly payment and let automation do the rest. Convenient!

Lastly, it shows consistency and becomes a reminder that the advisor is there to support the client’s financial life. Clients know that there is an open door policy when it comes to asking questions and sharing concerns throughout the year. This helps build loyalty.

The Key to Success with a Monthly Pay Model: Manage Expectations

If you implement such a cost structure without defining the relationship further, clients may expect to hear from you each month... why else would they be paying monthly, right?

This is where managing expectations comes into play. The good news is that Millennials are used to a monthly expense cycle. They pay their rent, utilities, cell phone, cable, car insurance, Spotify, etc. every month.

Adding one more payment won’t be an issue, given they see the value in your services.

On the other hand, most monthly payments come with the ability to use something monthly. As mentioned above, if you pay for a gym membership monthly, you expect to utilize the gym throughout the month.

This is not necessarily the case for this particular financial planning service.

As such, the advisor must be very clear how the relationship works before it even begins.

So, the simple answer to the question is no; monthly pay does not mean that you have to talk with your clients monthly. Certainly, since this is an ongoing relationship, I recommend allowing clients the ability to contact you with questions or concerns as they arise (in between scheduled meetings throughout the year). This will help build the advisor/client relationship and show the client that you are looking out for their best interest.

The bottom line is that this payment method makes financial planning accessible to Millenials who might otherwise ignore this valuable service. And that’s exactly why I launched my firm to begin with: so that my services could have a positive impact on young professionals.

It all comes down to communication. Everything can be clarified in an authentic conversation. I recommend opening this discussion by sharing the many benefits listed above; smaller upfront payments, flexibility, automation, and consistency. Once you have shown the value in your monthly fee and stated the “rules of engagement” (i.e. when and how to contact you through the relationship), it should be smooth sailing.

Using the monthly pay model and method should help you attract a wealth of young clients. And it helps you stand out and apart from other financial advisors who aren't willing to shake things up in order to develop a system that works well for Gen X and Gen Y clients.


About the Author

Eric Roberge is a Certified Financial Planner™ (CFP®) and founder of Beyond Your Hammock. He works face to face and virtually with professionals in their 20s and 30s, helping them use money as a tool to live a life they love.

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