My Client Thinks Investment Advice Should Be Free. What Now?

7. Tax consequences. The federal government isn't a big fan of day trading. That's why taxes on short term gains are higher. Suppose an investor sits at their screen, trading all day. If they are wildly successful, they have risked their money, yet the Federal government is their silent partner. Although advisors cannot give accounting advice, they can warn clients about tax consequences. They see the big picture.

8. Temperament. Are any of your friends drama queens? Could someone fit in well on one of the Real Housewives series? Do you have scary friends who get physically violent when the get upset? These are not the type of people who should be making their own investment decisions. Advisors are used to working with many personality types. If a person isn't a good fit for one advisor, they might be a good fit with another.

9. Investing takes time. Investors can "set it and forget it" with a robo-advisor platform. Actually, they could have done that when the first balanced mutual fund came out in 1928. Many investors want to get more involved, choosing stocks or sectors. The stock market operates on a 24-hour cycle. Events happen in Europe and Asia that affect our market at the opening. Advisors at big firms have analysts on the ground in these diverse markets. They provide advisors with commentary and advice almost immediately.

10. Part of a bigger picture. There's a process in place, starting with data gathering when the client walks through the door, leading though multiple steps until the client is tracking progress to goals with their advisor. Placing trades is only a small part of the process. Planning could be sold as a standalone product. Reviews and ongoing advice could be billed on an hourly basis, similar to lawyers and accountants. What might that cost? Wouldn't clients prefer the service wrapped into a package?

11. Juggling balls. Clients often don't have just a single financial advisory relationship. they might save in one place, trade in another and invest in a third. Someone needs to make sense of how the pieces come together. Their accountant can do it, for a fee. Advisors often pull the various accounts together in a consolidated report for the client's benefit.

12. What if you lose interest? Investing has become a spectator sport. People like talking about it. Everyone has an opinion. Do you know anyone who stopped going to the gym because they got bored? Planning for your retirement shouldn't fit into that category. Advisors stay focused, even if clients don't.

13. Vacation. You can put your gym membership on hold. Unless you sell everything in your portfolio and accept the tax consequences, you don't have that option with an investment account. The client might be out of the picture for several weeks, but their advisor is still on the case. It's not uncommon for advisors to contact clients on vacation if something important needs attention.

14. Pay as you go. Buy a new car and it depreciates when you drive it home. Buy an investment with a front-end load or surrender charge and there's a cost to get out, because it's sold as a long-term investment. Although managed money is a long-term investment too, you only pay for the time you are in the program. If the client is unhappy with the results or the relationship, they can take their money elsewhere, mindful of the tax consequences.

Advice has value. That's the message you need to communicate.