We think consumers always shop for the lowest price. They know where to find the cheapest gas (often Costco.) They know where to get the best grocery prices (often Aldi and Lidl).
You assume when they talk about financial services that they are prepared to beat you down on price because they comparison shop for everything else online.
In many situations, trust carries a higher value than saving money. People will pay more if they feel the other person has their best interests in mind. Often a lot more. They will pay willingly.
1. Hair styling. People have their favorite barber or stylist. They will follow them from one salon to another. They take their advice on changing their look and how their hair should be cut.
2. Veterinarians. Many Americans have pets. We treat them as family members. We bring them in for annual checkups. We make an appointment if they are lethargic.
When the vet recommends a course of treatment, we often say “Do it” and hand over our charge cards. People usually don’t shop around for veterinary care.
3. Accountants. Taxes are complex. CPAs know more than we do. It’s almost impossible for a business to file their taxes without the help of an accounting professional.
When your accountant says: “Here’s what you owe,” we pay up. If they say: “I have an idea how you can save money on taxes,” we say “Fine.”
4. Wine guy (or gal) at the liquor store. If you are a wine fan, you have your favorite wine professional at the liquor store. You ask for them on arrival. You tell them what you want or what you are serving.
They make recommendations. They know your tastes and budget. You ask: “Do you have any recommendations?” You buy without negotiating because any discount you get is built into their system.
5. Mechanic. You have a favorite shop that services your car. You know the lead mechanic, and they know you. It’s a friendly relationship. When your car makes a noise, you bring it into the shop.
After they check it out, they call and tell you about the problem. They give a solution and quote a price. You say, “Do it.”
6. Doctors. We depart from price because medical care is usually covered by insurance. It’s rare for anyone to pay “retail.” If the doctor says: “We need more tests,” or “I’m putting you on this medication,” we agree. Why? Because we feel they know us and have our best interests at heart.
7. Bartenders. This one is unexpected. Let’s include your favorite restaurant servers, too. Your friendly bartender says, “I know you are a scotch fan. We just got this 25-year-old Scotch in. We were only allocated one bottle. It’s not cheap, but I really think you should try it.” You follow their advice. You probably don’t even ask the price.
8. Financial professionals. This includes insurance agents and financial advisors. Once trust is established, clients can be very loyal, often down through generations.
Once they feel the advisor or agent has their best interests at heart, they usually follow advice.
What do all these professions have in common? Trust. Familiarity. Likeability. Respect. When these factors come together, price is rarely an issue. You fit into that last category.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” can be found on Amazon.