And this becomes even more important for those of us who sell our expertise at an hourly rate – which includes everyone from lawyers to many financial professionals. But while my solicitor has a clear hourly rate (albeit a business model under attack in recent times), many charge for each service even if behind the scenes it is really a calculation based on an hourly average rate. For example, an adviser producing a client review might assume three hours work is needed, including preparation and the client meeting, and so work out an appropriate charge based on this amount of time.
But all too frequently we are overly willing to undersell the value of our time. Fundamentally we need to accept the fact that time is finite and so the odd half an hour extra ‘free’ for a particular client does not make long-term business sense. As I have said before, it is having the confidence to levy appropriate charges – and to robustly and fairly defend those charges – that creates a business with true longevity. Businesses that sell their owners’ time at a discount cannot, by definition, expand beyond, or after, their founders. And returning to financial advice: the increased transparency of a fee-based model should help people to value something they did not realise they were paying for before. This, however, is as much an opportunity as a threat: educating clients as to why they should pay (be it for film downloads or financial advice) makes them more likely to be happy to pay in perpetuity. Sometimes people have to pay for something to truly realise its value.
James Bateman is head of multi-manager and multi-asset portfolio management for Fidelity Worldwide Investment
