Fee-based financial planning — whether it’s a fee for service or a fee based on assets — offers clients distinct advantages over commission-based advice. But introducing such a major change into your practice is sure to meet some resistance.

“Inevitably, you’re going to have clients who will bring up objections. That is human nature,” says Marc Lamontagne, founder of To Fee or Not to Fee, an Ottawa-based advisor-training company that offers workshops on making the transition to the fee model. “Some people have a tough time with change.”

In particular, clients who are accustomed to paying embedded commissions often resist the idea of being billed for advice when they’ve never received a bill previously. However, by explaining the reasons for the transition and the advantages of fee-based advice, you may find that clients embrace the new model.

> Don’t rush the process
Propose the fee model to clients many months before you begin making the transition, rather than waiting until the last minute to get them on board, suggests John De Goey, a certified financial planner and vice president with Hamilton, Ont.-based Burgeonvest Bick Securities Ltd., where he operates under a fee-based model. This allows clients a period to consider switching without feeling pressure.

“You need time to get buy-in,” De Goey says. “Some clients buy in more quickly than others.”

Another strategy for removing pressure is to make fees optional for clients, suggests Lamontagne. Rather than forcing clients into the fee model, he recommends, frame it as an optional change that would be beneficial for them. If they choose to stick with commissions, propose the fee model again a few months later.

“Sometimes, people just need time to get used to change,” he says. “They may be saying, ‘No’ right now, but may not say ‘No’ in six months.”

> Emphasize the importance of unbiased advice
Explain to clients that you face product recommendation limitations under a commission-based compensation structure; you rely on commissions from the products you were recommending for income. Contrast that with the fee-based structure, which removes restrictions on the range of products you can recommend to clients.

“You can now recommend what you think is best for the client,” De Goey says, “as opposed to what’s best for the client from the limited list of products that actually pay you.”

Clients will be more likely to embrace the idea of paying for unbiased advice, knowing that you are not being compensated to promote a particular product.

Says Lamontagne: “The fee model really eliminates that conflict of interest.”

> Point to potential cost savings
Show clients how much they were paying in charges and commissions under your previous model and compare that to the amount they’ll pay in fees. In many cases, their total costs will come down under the fee-based model, even though your income could potentially rise. That’s because you’ll have more flexibility in using products with lower management fees, such as exchange-traded funds.

“There are potential cost savings to the client,” says Lamontagne. “Clients like to hear that.”

There are further savings for the client in the form of potential tax deductions. If clients have a non-registered account, they may be able to deduct the investment counsel fees on their tax returns.

> Sell your value proposition
Clients will now be paying you directly for the services you provide, so show them what kind of value they’re getting for their money.

“A lot of advisors don’t really understand their value proposition,” says Lamontagne. “Be very clear about what it is that they’re paying for.”

He recommends being specific about such details as how often you’ll review their portfolio, and how often they’ll receive statements.