In just minutes, there she was – an original Picasso. “What do I owe you?” she asked.“Five thousand francs,” he answered. “But it only took you three minutes,” she reminded him. “No,” Picasso said,”it took me all my life.” For me, this story underlines the failings of an hourly-rate approach to fees. Value emerges from the experience and talent someone brings to a situation, not the time it takes to do something. Reward based on time risks inefficiency and abuse of timesheets. Reward based on the agreed value derived for the client, irrespective of time taken, achieves transparency and encourages efficiency, which are in the long-term interests of client and adviser. When hourly rates are quoted, they end up becoming a topic being discussed in isolation. Objections are raised in the client’s mind which cloud the issue and move the focus from one of delivering value to justifying cost. Hourly rates are also a difficult basis on which to make direct comparisons as they imply that all advisers take the same time to deliver their recommendations. How many clients go for the cheapest when buying other goods and services? Being cheap suggests inferior quality or service, in many instances. So why would a client want to go to the cheapest financial planner? The challenge facing advisers is to ensure they spend time working on things that clients recognise as being of value. Research demonstrates that clients value quality service that saves them time, impartial advice they can trust, good proactive relationships that give them peace of mind and technical skills that make them money. What they value least is time spent simply administering their affairs. Herein lies the dilemma. Too often, admin absorbs a disproportionate amount of time, limiting the time available to deliver the value for which you can earn a profitable margin. This is where wrap platforms and an effective IT strategy are critical. The feeling that clients most commonly want to experience is having peace of mind. Guarantees around price, efficiency and quality provide peace of mind. The more guarantees one can build into a proposition, the greater comfort for a client. They will attach greater value to that proposition and, as a result, are likely to pay for it. For example, I paid more for a fixed-rate mortgage than I could have paid for a discounted, variable deal. I was buying peace of mind. As a member of the Sunday Times Wine Club, I know I pay extra for every bottle I drink but I have the peace of mind that they will refund me with- out question for any bottle I do not find satisfactory. The certainty allied to fixed pricing serves to enhance a client’s peace of mind. This means charging according to value delivered, not hourly rates. However, fixed pricing is underpinned by the need to have a good grasp of how long a piece of work will take. My experience in helping IFAs migrate towards a fee-based proposition has led me to develop a calculator. It helps businesses and sole traders establish the minimum charging levels they should consider to make a profit on work for clients and prospects. It also enables a business to look at the impact on profitability of structural changes to the business. This is available free, along with a comprehensive report on charging fees on a fixed and value pricing basis, at www.axa.co.uk/intermediaries/managementconsultancy.