7 Ways to Start Earning More
Professionals in finance & investments can increase their income!
Whenever I ask “Are you earning enough?” I get a blank stare or an awkward moment of silence.
It’s a touchy subject, asking for a raise or telling prospective clients how much you charge. If you're under-earning, you will constantly struggle to pay your living expenses or business overhead. And if you don't soon create an intention to earn more, you will be limiting your financial prosperity for many years to come.
It is a conundrum figuring out how you can earn more, deliver more value, and reach your income goals!
What strikes me most about earning potential in the investment industry is that it doesn’t matter what you do for a living - financial advisors, finance professionals, and investment managers the world over struggle with how to negotiate a better salary or how to charge clients more.
I believe in reaching for the sky and maximizing earning potential so I recommend that my clients think strategically and make a plan so that they can command higher prices or a higher salary.
This article has 2 parts. The first is for investment managers and financial advisors, providing tips for charging more. The second part is for both career professionals and advisors and gives 7 strategies to earn more.
- Career professionals: Your big tip: In your job search, spend time practicing the interviewing skills that will allow you to command higher salary and better perks and bonuses. This includes role playing with a coach or mentor so that you're ready to ask for and get a higher salary.
- Investment managers: Your big tip: Price your investment management services so that you are getting paid well and not competing with the Vanguards of the world. Provide excellent service to your clients and Brand what you do so that you stand apart from the thousands of people doing similar things.
Part 1: For Financial Advisors and Investment Managers with their own firms
Deciding what to charge for financial planning, wealth management, or investment management is like creating a price equation. You must account for overhead such as salaries, rent, electricity, phone, and insurance. You must provide for your own health insurance, federal income and payroll taxes, and retirement plan contribution.
When you work for an employer, they pay these costs -Your paycheck does not reflect the actual cost of employing you. When you are the boss, you pay these expenses out of your own pocket, or rather your company's income - It’s all your responsibility. Besides overhead, you must add a reasonable rate for your service to complete your price equation.
When I first begin working with financial advisors or investment managers, I usually find that they are NOT charging enough or they are not charging for all the services they provide.
A. When Charging Hourly
A good rule of thumb is to charge an hourly rate that would give you enough to cover your expenses and provide for a decent living. Factors to take into account include your experience, background, and track record.
B. When Charging by the Project
Developing a Financial Plan is a great example for charging by the project: You should gather all the information to determine what you will charge and what will be included. How many hours will go into the project? If the client has complicated finances, you'll be doing more data entry than for an average client. Be very clear in your contract regarding what the client will receive because you don’t want to allow additional services and requests to sneak into the project without charging for them.
C. Keep this in mind
Although you may work 40 plus hours per week you will most likely bill 25-30 hours as you will find that managing your business will take you at least 10 hours per week. If your fee is too low, you will constantly be under-funded and will have a tough time making a decent living. If you're performing duties for which you are not paid, you’ll be playing catch up and you’ll never get ahead.
D. Time Management Tip
Professional business owners keep track of their time whether they charge by the hour or by the project. This allows you to see where you are wasting time. If your hourly fee is generally $200/hr or is worth that much, but you spent 80 hours on a project for which you charged $4000, then you really only earned $50 an hour. You either need to charge more, be more productive with your time, or put limitations on the project scope.
E. How do you decide how much to charge?
A good starting place is to find out how much others in your field charge for similar work. Also, find out if competitors provide the same deliverables that you do. If you give more, you should charge more (provided what you give is in demand in the marketplace).
Aha moment: Clients don't value what they don't pay for!
Don't charge less thinking you'll get more clients - this strategy could backfire. If you're providing a Financial Plan free of charge, the client may not value the plan nor the advice!
Also, charging less than your main competitors won’t allow you to live a better life. You’ll find that clients who shop on price are difficult to please and are not fun to work with. You’ll have a tough time paying the expenses to run your business.
Aha moment: Sell the BENEFITS of what you offer
If you don't charge enough, you’ll need more clients and you’ll wear yourself out. Low price strategies work for the Walmarts of the world who provide high volume products for the masses. For financial planning and investment management, you must learn how to sell the benefits: a better standard of living and clarity of direction.
F. Make sure you're worth what you charge
I once remarked that a client’s fees were low and that we should work on strategies to increase his fees. The next week his fee was suddenly 25% higher. I cautioned him. You must base your fee on the value you provide in the marketplace. You have to work at improving the value you provide before you raise your fee. If nothing’s changed in the way you deliver your product or service, you can rarely charge more.
For finance career professionals, advisors, and investment managers. So the big question is: When can you earn more?
1) When you have completed extensive training above what's customary in your field – This shows you have skills others don’t have, so you CAN charge more or command a higher salary.
2) When you have completed a credential – i.e. CFP®, ChFC, CFA CIMA, PMP, etc.
The knowledge you gain from a credential allows you to position your practice uniquely to attract higher net worth clients that are WILLING to pay more.
3) When you have established a track record:
- If you've helped many satisfied clients over the years you will have a track record that demonstrates that you get RESULTS.
- If you've worked or interned at a prestigious firm, you will have a track record.
4) When you have cornered the market on a unique technique or skill – If very few people can provide a skill or technique that is exclusively yours, clients will have to go to you. Creating DEMAND in the market place will allow you to charge more. You can do this through branding your practice, branding your service model, or branding your investment process.
Career professionals can use white papers they have written, studies they have worked on, and special projects they've completed.
5) When you BELIEVE you are worth it – Even if all the above applies to you, you must still believe in yourself. Do you do a good job? Do your clients or higher ups love you? If you have the confidence that your skills and service are exemplary then for goodness sakes, CHARGE MORE or request a meeting with your manager to begin negotiations for a higher salary.
If you don't have the confidence, what will it take to get it?
What's the next step?
6) You have to take a stand and charge what you are worth or ask for a higher salary. Stop providing free or low cost financial planning. Stop spending time on tasks for which you are not paid. Remember: Clients rarely value services they are not paying for and will not be good sources of referrals for this reason.
Believe in yourself. Go after what you want. You are in charge of your life and your career!