How to Ensure You’re Ignored By Clients – By Marlōn Hall

Jargon is commonly defined as “words or expressions used by a particular profession or group and are difficult for others to understand.”

401k, jargon, communication, fees, costs
Marlōn Hall

Fee” is one of the words that falls into that category. The healthcare industry employs a fee-for-service model. Most hotels and restaurants in the U.S. charge a service fee, often in lieu of tipping. And airline passengers routinely get hit with a number of service fees, including for checked or oversized baggage.

The problem with using fee to describe these added charges is that the word implies there is no exchange of value.

Consider these two scenarios and the different reactions to the words fee and cost:

Scenario 1:

On your way home from work, you stop at a convenience store to pick up a gallon of milk and a loaf of bread. The label on the shelf below each item says $2.50. You grab the milk and bread, and head for the register to check out. After the cashier swipes the items and the total appears on the electronic display screen in front of you, the cashier says, “That will be a $5.00 fee.” You would probably think, “Why would I pay a fee to buy groceries?”

Scenario 2:

On your way home from work, you stop at a gas station to fill up your pickup truck. As you stand at the pump, watching the price dial click higher and higher, you wistfully think to yourself, “I remember the good old days when I paid less than $50.00 for a tank of gas!” But you realize that you’re not going anywhere on an empty tank and accept the fact that today it costs $50.00 to fill up.

Connecting value to services

When you analyze the two scenarios above, it’s clear that using the word “fee” separates an item from its value. Likewise, using the word “cost” does the opposite.

Cost implies that the consumer is getting something of value in exchange for the money, even when that something—such as an idea—is intangible.

As financial services professionals, we know that the word fee is prevalent in our industry. There are fee schedules, fee-based advisors, fee this and fee that. It’s ubiquitous.

To be sure, jargon is an integral component of any industry culture—and ours is no different. Yet, even when jargon is detrimental to our business, we continue to use it.

Here’s an example:

Banks now must account for “fee waivers” as line items on their balance sheets due to growing customer demand for them.

Indeed, more and more people are requesting that fees be waived because they don’t connect the value of a service provided by the bank to the money that’s deducted from their accounts in exchange for the service.

If bank employees were trained to refer to overdraft fees and stop payment fees as costs rather than fees, there likely would be a significant reduction in fee waivers, because customers typically don’t request costs to be waived.

They aren’t asking for something for free. Rather, they are simply asking that the bank not take their money and provide no value in exchange.

Purging fees

Clearly, jargon can get in the way of effective communication and undermine your efforts. Even so, like most financial professionals, you probably use a fee schedule in your business.

But understand that fee is a powerful word—often not in a good way—and our industry has long been blind to its negative connotation. For this reason, I’d advise you to consider replacing fee with cost in all your documents outlining services that will be delivered in exchange for money.

In your cost schedule, describe in detail the value or service being provided for its cost.

Bottom line, if you want your clients to reject what you’re recommending and ignore the value you’re seeking to provide, using the word fee is a perfect way to accomplish this.

On the other hand, if you want your clients to earnestly consider what you’re proposing and appreciate the value you’re striving to deliver, using the word cost can help facilitate that positive response and hopefully sow the seeds of a long and mutually beneficial relationship.

Marlōn Hall, CFSis a Regional Vice President with Jackson National Life Distributors LLC, where he works primarily with Financial Advisors and Financial Institutions in the Midwest. The married father of three began his financial services career at a family-owned bank in the Mountain West.  

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