Advisors are better off laying out all the costs of doing business on the table with clients.

A recent SEI Global Wealth survey shows clients are bullish on communication – and bearish on advisors who beat around the bush:

• 37% of clients want the full cost of services explained up front
• 33% need feedback on whether they’re meeting retirement-saving goals, and
• 19% want an advisor who can explain why their investment portfolio is growing or shrinking.

Another crucial finding of the study:

Advisors send their clients tons of information, but often it’s not info they want or need.

The lesson: Quantity doesn’t equal quality – or client satisfaction. Financial advisors who can provide clients the info they want have the advantage these days.

The Patient Protection and Affordable Care Act, otherwise known as Obamacare.

A recent survey by the National Association of Insurance and Financial Advisors (NAIFA) of 378 members who sell health insurance shows 80% report decreased commissions in the past two years.

Reason: The medical loss ratio (MLR) in Obamacare requires insurers to spend at least 80% of individual and small health insurance premiums, and 85% of large group policies, on purely medical or patient-specific expenses.

Some in the insurance agency warned before Congress passed Obamacare that insurers would take a hit, as well as insured customers (shocker there). Sure enough, insurance premiums spiked in 2009 and they haven’t stopped climbing.

Nearly a quarter of brokers and agents say they’ve reduced customer service because of the decline in revenue, and another 29% say they will reduce customer service further if commissions don’t improve.

What do you think: Should Obamacare be repealed? Let us know below.

Case in point: Employees who sought some kind of investment help with their 401(k) plans saw an average annual return of 3% better than workers who handled their accounts by themselves.

A new study by investment firm Financial Engines and HR consultant Aon Hewitt tracked more than 425,000 employees’ 401(k) accounts over a five-year period (2006-10).

The firms measured “help” as:

• putting an advisor in charge of managing the account
• seeking financial advice online (through a plan sponsor’s website), or
• setting up target-date mutual funds (where a mix of stocks and bonds are bought based on the client’s risk level).

You know – do they?

No doubt an average three-percent edge would open any financial pro’s eyes.  But what about the average client?

He or she may say, “So what? I’m not paying high fees the other guys are.”

Here’s how you answer to “So what?”:

Let’s say two 401(k) participants invest $10,000 at age 45. But only one of the two seeks investment help.

After 20 years, the participant who never sought help saves about $42,000 (based on average 401(k) rates of return). The participant who gets help will have around $71,000 – a whopping 70% higher!

As the figures show, your fees are one of the best bargains a client can get. The key: Let clients and prospects know how valuable you are (without bragging too much, of course).

Does your firm offer clients enough financial-planning help? Let us know about it below.

That’s especially true for client companies’ employees. They question where their hard-earned money is going.

Advise your clients on why certain fees are charged in retirement plan materials. For example, include definitions like:

• Administrative fees cover the costs of maintaining an account, such as recordkeeping, accounting and issuing statements — all of which are required by federal law.
• Investment fees cover investment advice, brokerage fees, etc. — services that help maximize a retirement account’s performance over time.

Also: Listing administrative fees clearly on participants’ statements helps too.

The Department of Labor has info on 401(k) fees for employers here.

Do your clients chafe at fees? Share your experiences in the comments section.

Reason: Many of them are confused as hell, but they won’t admit it.

A new Charles Schwab research study shows:

• 53% of clients think their 401(k) plan is more confusing than their health plan
• Only 47% are very confident making investment decisions, yet
• 70% say their 401(k) plan is their primary or only source of retirement savings!

The study also bears out the old adage, “You can lead them to water but you can’t make them drink:”

• 55% say they would use free, individual investing guidance if their company offered it, but
• Less than 10% who do have free access take advantage of it.

Consider trying these two tactics to answer your clients’ questions:

1) Shy away from “investor speak.” Use common English whenever possible to explain investing.

2) Break investing down to the basics. Explain what stocks and mutual funds are, how they appreciate over time, etc.

3) Spell out investing terminology. Even a 101 term like “dividend” may be unfamiliar to some folks. Explain what a term means.

4) Ask for questions repeatedly. Don’t move on to a new point until everyone’s clear on what you just discussed.

Any other ideas to share? Let us know in the comments section.

One way or the other, investors must see their 401(k) plan fees in writing on every quarterly statement, under federal law.

Starting in 14 months, the U.S. Department of Labor (DoL) will require that:

• 401(k) plan quarterly reports list every fee and expense
• Fees be listed both in dollar amount and as a percentage of each $1,000 invested in the retirement plan
• Employees  are given free plan information up front, and
• That info be made available online so employees can compare all funds in the plan.

Secretary of Labor Hilda Solis says it’s a win-win: “Current law does not require … workers be given the information they need to make informed investment decisions or that it is furnished in a user-friendly format. This rule will ensure that all workers have access to the information they need to make informed decisions.”

Apparently Ms. Solis never heard the maxim, “There’s no such thing as a free lunch.” Financial services will spend more time (and money) running more numbers, hiring more administrative staff, upgrading their web sites, printing more statements …

… and those costs will be passed along mostly to (sigh) clients.

Do you think disclosing every fee is a good idea? Sound off in the comments section.

Decision-makers consistently name six practices that help financial advisers close the deal:

1. “Listen and respond to my needs. Don’t sell me your product. Solve my problem.”

2. “Present solutions honestly and simply. Don’t try dazzling me and don’t badmouth my current provider.”

3. “Follow up faithfully. Stay in contact via e-mail or phone calls. But more than once a week is probably pushing it, unless you’re answering questions I have). P.S. Return my messages promptly.”

4. “Respect our buying process. And get to know my company.”

5. “Demonstrate value. I know not all financial service providers are the same. But I don’t accept, based solely on your word, that you’re better than the competition! Prove it. Show me.”

Chime in with your take in the comments section.

(Adapted from the newsletter The Selling Advantage.)

Reason: Young millionaires prefer investing their money themselves and think that advisors are too expensive. The younger they are, the stronger they feel that way, too.

A new study by the Spectrem Group found:

• 58% of millionaires between ages 41-45 say financial advisors charge too much, and
• 74% under 35 think the same thing.

Just as many consumers are eating at home more often and doing more home repairs themselves, wealthy investors are being more careful with their money, too.

Spectrem recommends three ways financial advisors attract younger investors:

1) Lay out high- and low-risk investments that help them protect their money

2) Give in-depth info via e-mail newsletter or website, and

3) Make investing easier via online applications.

Do any of your prospects complain about your rates? Let us know in the comments section.