We all want to be heard and understood. It’s a fundamental human need. Oftentimes, just being heard is more important than any words or response that may come next.
Consider these situations from everyday life:
- What hurts more: making a mistake or feeling that someone you trust believed that your mistake was intentional and malicious? The latter is far worse, right?
- You want a loved one to understand how you’re feeling. If you just explain your point of view very well, you can get that person to understand what’s going on, right?
- When someone intently listens to your words and feelings, you feel so incredible that you don’t want to stop sharing. You want to share more and more, right?
Right! The best way to show someone that you understand them is to listen to them. Listening benefits the listener as well as the talker. It builds trust, avoids misunderstandings and empowers both people. That thinking can be the foundation of your strategy during every client discussion, yet it’s an especially great philosophy before beginning a difficult discussion.
Rethinking your response to fee dissatisfaction.
You know everything you put into your work and how dedicated you are to your clients. Yet, a client too often focuses on the bottom line: your fee. In their eyes, is what you’re providing worth the money?
“How dare they?!” you may respond as you feel your integrity being questioned.
Stop and try to rethink the situation entirely. Instead of feeling attacked or the need to defend your fees with logical reasoning (your education, your experience, your worth), try this: Listen to understand. Give positive nonverbal feedback — look eye-to-eye, nod your head, etc. — and reply verbally only with “yes” and “I see” or “I get it.” Be non-judgmental, patient and empathetic.
You may quickly find that being understood immediately shifts your client’s perspective. Instead of feeling invisible, they feel visible. Instead of feeling down, they feel uplifted. Instead of angry, they feel calm.
What you’re doing is breaking down the negative emotions, resentments or emotional baggage they’re bringing to the conversation. When someone is listened to well, it makes them feel accepted, important and valued.
Words have no meaning — people have meaning.
That may sound a bit mystical, but it has a place in this discussion. Everyone’s life experiences and formed perceptions differ. We may think we’re connecting, but the message may be interpreted differently than what we intended. Don’t assume anything; check in early and often.
How to handle negotiations.
So, all of that listening advice doesn’t solve the conflict. Your client is still upset about your fees. Well, if you follow some of the tips above, your negotiation has already started, and maybe without you having to say a word.
You’ve broken down some barriers, making your client feel accepted and valued. Now, perhaps ask some questions, “How do you feel about this?” “You’re not seeing enough value?” “How would you resolve this?” Paraphrase what you hear, so your client knows you understand.
Every advisor is different, and we can’t dictate how you should proceed. But, consider replying with something like…
“Normally, our fees are solid, and we rarely negotiate. The value we add speaks for itself. But you’ve raised some good points. Your situation is unique, and our ongoing involvement is less than we anticipated. Do you think a reduction of X% is fair?”
What this response primarily does is show that your client has been heard. You’ve considered their point of view, and you’re negotiating based on the merit of what the client said. Maybe the client wanted a reduction amount more than your X%; that’s OK. With your listening, understanding and response, that X% is likely to be perceived as significant (and hopefully acceptable).
Because your response (and offer) includes an explanation of how it was made after hearing the client’s position, it’s more likely to be accepted. The fact that you acknowledged him/her is key. That person is being heard and understood.
Human behavior is fascinating, isn’t it? Especially when making financial decisions. Continue to explore clients’ motivators, biases and limitations surrounding finances by reading An Advisor’s Guide to Behavioral Finance. It’ll give you a leg up on providing full client value. Simply click the link below to access your copy.