Its not often that we get a chance to speak to our own peers and exchange thoughts on common business issues. But, here we are at this conference – “naked amongst ourselves” in a manner of speaking – ready to take a long hard look at our businesses and gear up for the challenges ahead of us.

I recall a ghazal that is quite apt for what we face today :

“Ik na ik shamma to jalaye rakhiye
Subah hone ko hai, mahaul banaye to rakhiye”

To put it in simple English,

As darkness approaches, keep at least one lamp on
For, the morning will come and you need to be prepared for it

Break down the walls

I am going to deal with 3 key issues in the section that I call “break down the walls”.

1.       Mindset

The thought of actually going and asking a client to cut out a cheque for Rs. 50000 or something else – as advisory fees – seems intimidating to many of us.  At least, that’s how I felt when I had to talk to my first client about fees.  The only way to deal with this issue is to build up confidence.

Many of you may have read this book “The Secret” by Rhonda Byrne.  She says very clearly : “Unless you deeply desire and visualise what you want, you are not going to get it.”

If you fill yourself up with pessimism and negativism right from the beginning – you will not succeed. If you are positive, you attract positive things and you will get ahead.  Its as simple as that.

Why is it that we get scared to ask for a fee?  Andrew here has been charging fees for so many years!  So many advisors around the world charge fees.  Its just that its happening in our market for the first time – hence our apprehensions.

When we pay an annual maintenance charge to the guy who services our Aquaguard or our computers – long long after we finished paying for the product – we don’t bat an eyelid. But when it comes to our turn to ask for our fees, we are scared.  Why should we be scared.  We are doing far more important work, my friends, in safeguarding our clients’ wealth. But, you need to believe in this.

Stand in front of a mirror, look at yourself.  Aren’t you professional? Aren’t you an expert?  Aren’t you truly working for your client?  If that’s true, why can’t you go and charge your client for your service?

2.       Conceptualising

Once we equip ourselves with adequate tools, we will find it a lot easier to charge fees. We’ve always equipped ourselves with tools for selling products, selling advice – we’ve always focussed on selling, all our lives.  In the new context, lets look at tools again that will help us.

Very simply, take a piece of paper and start writing down all the things you have been doing for your clients. Put them down in various heads – financial planning, advisory, operations support – call them whatever you like. Once you make an exhaustive list, you realise that you have been doing a lot for your clients.

Once you’ve written it down, it becomes tangible.  What is tangible, is billable. You have to work to create your service visibility.

One more thing you need to do – if you haven’t done so already – get yourself an investment philosophy. Spend some time and effort – read books – there are many out there – but make sure you can articulate clearly what your investment philosophy is.

3.       Systemising

Next is systemising all that you have done. You need to be able to repeat operations a number of times, successfully. And for that, you need to systemise your processes. Whether it is creating templates for reviews, fixing turn-around times for query resolution or any other service delivery – have systems in place. You need to ensure that even if you are not there, somebody is doing all the maintenance functions. Systemising helps you minimise errors, helps you free up time, helps you delegate.

When you are propositioning to a client, focus more on the advisory, not the operations. Operations – anybody can do.  Advisory – only a few can do.  If you have those skill sets, focus on them.  You can get a fee for advice, you are unlikely to get a fee for operational support.

Once you’ve got all of this together, think of how the large consulting firms package themselves.  They make things look a little difficult, a little complex. Once you’ve got the content in place, focus on the packaging – it is very critical for you to get value for your content.

The three steps in a nutshell : build content, build confidence and then go and bill your client.

The Hexagon experience

Map your clients

In the last couple of months, here’s what we did at Hexagon.  We first decided to map our clients. We created three baskets of clients, based on the intensity and variety of services we rendered to them.

Articulate your value proposition

Then you need to look at yourself and understand clearly : what’s YOUR value proposition.  If you don’t have one, or if its weak, you are in for an uphill struggle.

Offer a clear set of values and services – list down as many as you can – its going to be worth the effort.  Next you try and quantify the services offered.  What cannot be quantified or clearly demonstrated, cannot be billed.

Be clear about your profit strategy

You need to be clear about your profit strategy.  All of us have different cost structures, different client profiles.  You need to be clear about where you are going to make your money.  Are you looking to make money from existing clients, are you looking to make money from new clients, are you looking to make money out of profit-sharing arrangements or are you planning to make money purely from professional charges?  You need to look at your fixed and variable costs and figure out whether you have a workable profit strategy.

Understand your costs

Then, you need to understand your costs very closely.  You will be surprised to see how much your back office operations cost on a per client or per transaction basis.

Establish lines of communication with clients

Once you’ve done this, establish lines of communication with your clients.  Write to them, speak to them, don’t shy away.  Explain your situation and the rationale for your fee proposal – and you might find many of them empathising with what you say

Transfer ownership of idea to clients

Another thing you should try and do is to transfer ownership of this idea to your client. Get your clients to buy into the idea.  Sounds difficult – actually not, I have tried it myself.

Do beta testing of your model

Then, conduct some beta testing.  I come from Bangalore – the software capital – where this terminology is very common. What does this mean?  Take your product and show it to some clients with whom you share a good rapport, clients who will give you unbiased advice, whom you trust, and who trust you.  Take their feedback, incorporate changes that make sense, and then roll out your packaged offering to your clients.

Don’t spread yourself too thin

You need to become an important person for your clients as well as your AMC partners.  Don’t spread yourself too thin on either direction.  Take on and manage as many clients as you can do justice to.  Eventually, for advisors, time is money. You have to be economical with your time.

Don’t invest in software in a hurry

Do not invest in software in a hurry.  There are a lot of changes happening in the environment around us.  Don’t make any commitments to pay or be in a hurry to upgrade until you have some clarity – on platforms, processes etc.  Also, ensure that you have clarity on how many clients have agreed to pay you fees before you rush and spend more money in the hope that they might pay.

Establish a billing system

And of course, establish a billing system. Please don’t send hand written bills. Have a well generated bill and establish a follow up mechanism so that the client takes this seriously.  Ensure that this follow up is done independent of the RM/advisor.

Key challenges

Find out : why are clients with you.  Also find out why are clients not with you. Where can you stand out?

You also need to do a lot of balancing on costs. Otherwise, you will not make the profit margins you aspire for.