How to Grab Fee Revenue You Didn’t Know You Had

After the analysis, we tested two or three different fee levels with some existing client accounts. In other words, at a certain dollar breakpoint, what would it look like if we charged a buck and a quarter? What would it look like if we charged a buck forty-five, etc.? We had a conversation with our whole team about whether or not it was reasonable and fair. We then wrote the client letter.

What kind of tangible results have you had besides knowing what each client costs you? What has the effect on revenue been?

When we did the fee analysis, it said we have the potential to increase annual revenue by as much as $207,000 dollars by raising our fees. We realized as we went through our book that we had assets under management for which we were charging absolutely nothing; it was just in brokerage accounts that had accumulated over time and as we were busy doing everything else.

We were providing reporting services on those accounts, monitoring them, sending out tax reports to accountants. We were providing everything that we provide on a fee account, but we weren’t charging [for those services]. So we converted all of those into fee-based accounts and captured about $10 million by doing so. By just using the industry standard 1%, that’s a hundred grand in new revenue.

How did clients react?

We got absolutely no pushback. In the letter I sent out, I talked about the firm. We had a new hire that we introduced at that time. I explained that our analysis showed we had quite a number of accounts where we were charging nothing. In 29 years, I have never once sent a letter to my clients saying we were raising fees. This time I said, “Don’t you think it’s about time?” I did get some people who chuckled over that. I did a telephone conference with a client who moved to New Hampshire. She got the forms, and her comment was, “You deserve every penny.” That was nice to hear.