The J.C. Penney Way

But when it comes to financial advice or financial products like annuities, most people are clueless about what they cost or should cost. As a result, any fee is automatically assumed to be too expensive. Perhaps it’s because people are handing over much of their hard-earned savings and, therefore, they believe that is enough of a payment. It may also be because fees and commissions for insurance products are opaque and not easy for most people to comprehend.

So it might not be a problem that fees are just too damn high but rather the industry and advisors not doing a good job of explaining those fees to consumers and why they are justified. Financial advice, like medical advice, doesn’t come cheap, and intricately underwritten products like annuities carry a heftier price tag than a pair of jeans at J.C. Penney.

Many advisors post their fee schedules prominently in their office, but when clients are bombarded daily by financial experts in the media hammering on what they think are too-high fees for financial products in general and annuities in particular, it’s understandable that any price put out there may be perceived as too pricey to the average consumer.

That doesn’t mean carriers and advisors should price themselves too high for the majority of Americans. There is an entire underserved middle-market of boomers that needs your services. Offering a range of product and services at different price points always makes sense. Let the consumer decide what they are they comfortable paying for and what their budget can bear.

A related question from the LHP/Senior Market Advisor survey was whether advisors had lowered their investment threshold (less than $100,000) to attract a broader client base. Sixty-six percent said they had not; yet that indicates a third have done so. Again, welcoming potential clients of more modest means could build up your practice. Said one respondent: “I never limited my client base. For lower asset clients, I would charge a flat fee rather than an AUM [assets under management] fee.”

Full disclosure of fees upfront is always a good idea. But so is explaining clearly to clients and prospects what exactly they are for and how they compare to other goods and services. (How many of your clients pay $5 a day for a latte?) And be brave enough to let your client comparison shop for other products and advisors. If you are truly offering good customer service, they won’t leave you no matter what you charge.

Help your clients understand that those fees may be a relatively small price to pay for a secure retirement. And they may even have some dollars left over for a shopping spree at J.C. Penney.

But tell us: Are you encountering more price objections lately and how do you counter them?

Maria Wood is the annuity channel editor for LifeHealthPro.com and managing editor of Senior Market Advisor.