My September submission to Physician’s Money Digest was entitled How To Negotiate Lower Advisory Fees. This is an important post because most docs never even considered negotiating, but should because almost all of them are paying more than they need to, even if they’re getting good advice. Here is an excerpt:
In personal finance, it is well-known that success comes from winning the big battles, rather than amassing thousands of minor triumphs. Psychologically, it is hard to deny yourself over and over and over again. So use your limited willpower where it will make the biggest difference – on the big expenses of your life. For most people, these include the costs associated with housing and transportation. For many physicians, the cost of their advisory fees are also a large expense, and over the course of a lifetime, may even dwarf the cost of housing. Minimizing these costs will speed your way to financial independence, and allow you to spend more on people, activities, and causes that bring you happiness. It doesn’t take a genius to realize that paying your financial advisor twice as much isn’t going to make you any happier. Follow these steps in order to lower the price of your advisory fees….
6. Negotiate From a Position of Power
Information is power in any negotiation, and now you have it. Negotiation doesn’t come naturally for doctors, who generally dislike confrontation. Your advisor has gone to great lengths to build a relationship with you, perhaps even a personal relationship. Severing it may be painful. It is best to keep the discussion strictly on business terms. (“It’s not that I don’t like you, but if I switch I can save $5,000 a year and as you know I could really use that money.”) If he tries to make it personal, I would suggest turning the tables. (“Since we’re such good friends, I’m sure you would be more than happy to lower my fees to less than I can get from Joe down the street.”) In the end, if you feel you’re getting good advice and good service from your current advisor, and if he is willing to lower your fees to what you would pay elsewhere, stick with him. If any of that is not true, at least you’ve already done the research to know where you should go.
Read the rest here, then come back and tell me what you think. Have you ever negotiated fees with a financial advisor? Why or why not? Do you think this is a reasonable approach? If you’re an advisor, what would you do with a client who tried to negotiate a lower fee? Comment below!