Practice growth
A fee schedule unchanged for a decade, against a service that keeps expanding, is a real-terms cut delivered annually.
A large number of advisory firms have not changed their fee schedule in a decade, while adding planning, tax coordination, more frequent reporting and considerably more compliance overhead.
That is a real-terms fee cut delivered annually, and it is usually not a decision. It is an avoided conversation.
Is the schedule right for new clients? The easiest change and the one to make first. Nobody is disrupted, and it establishes what the service is worth before you argue about the back book.
Is the back book mispriced? Usually yes, and unevenly — the mispricing is generally concentrated in relationships that were priced during a period when you were less experienced or more desperate.
Are some clients unprofitable? A different problem with different solutions, including segmentation or a graceful exit, and it should not be solved by raising everyone's fee.
Never alongside bad performance. Obvious, and firms still do it because the annual review is when everything gets discussed.
In writing, in advance, with a date. Sixty to ninety days. A client who learns about it from an invoice will be angrier about the method than the amount.
Explain what changed in what you deliver, not what changed in your costs. Nobody is buying your cost base. If nothing has changed in what you deliver, that is worth knowing before you send the letter.
Expect to lose some. A firm that loses nobody has almost certainly gone too small and too late. Model the revenue at ten percent attrition and check that it still clears.
Rather than raising rates across the board, many firms are better served by changing the shape — introducing a minimum, adding a planning fee for work currently given away, or restructuring so that complexity is priced rather than absorbed.
The most common finding when firms examine profitability by relationship is not that fees are broadly too low. It is that a small number of relationships consume an enormous share of capacity at the same rate as everyone else.
Before any letter, work out what your ten most demanding relationships actually cost you in hours, and compare that to what they pay. Most principals have never done this calculation, and it usually reframes the question entirely.
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