Allie Carey
Looking into the future, there's definitely cost pressures, as we've discussed, and different strategies to handle that. But what about from a revenue perspective and realising your revenue. Are there opportunities for firms to change in the future?
David Lincoln
On the pricing front, I think the story is fairly simple, at least to describe, which is like if you go to Starbucks today, you know, your coffee is like four bucks. I was like, "wait a second." Like it used to be three and before that it was two, and three was bad. But four is like, "oh my goodness." And so there's inflation everywhere. And so I don't think wealth management is immune to these types of pressures also.
So the cost of the key input, which is labor, is going up, I think therefore it makes a lot of sense that firms need to adjust. Some firms need to adjust their fees. If you just take their stated fees, the list price, what you find is that many companies don't adjust them very often. And so again, if we think about other services that consumers are habituated to buying, like Netflix, their prices go up all the time. A lot of other professional services that wealthier consumers might purchase, again, prices go up, luxury cars, prices go up.
For some reason, and wealth management fees don't change that often. Like a lot of times it's like, oh, we haven't updated our schedule since 2016. Well that's like, you know, seven years ago. And that's pretty common. And so it's just kind of a cultural phenomenon. I think that, you know, changes in the expense side really force people to kind of rethink some of these things. And so there are some firms out there that are sitting on old out-of-date fee schedules who are kind of lagging behind the market, who need to make some adjustments. That's the stated fee side.
The other kind of not-hidden secret at all about this business is that you can get discounts, right? Discounts are ubiquitous. That's also a practice that I think in this kind of environment, warrants a little bit more scrutiny. So what kind of controls can people put in place to help limit the number, either on their existing book or on new business coming in the front door? And so I think pricing certainly goes on the list as kind of a short-term response along with some of the other things that we've discussed.
Allie Carey
There's just so much opportunity out there to really focus in on how can you best position your business to move forward in the future, investing in your talent, but at the same time, you know, really re-evaluating or re-communicating your value proposition to your clients and reflecting that in your, in your fee schedule.
David Lincoln
Yes, absolutely. All those strategies I think are important.
Allie Carey
David, this has been a great conversation. Thank you so much for providing your insights.
David Lincoln
Yeah, you bet.
Allie Carey
I'm so happy we were able to do this.
David Lincoln
Thanks. Yeah, me too. I appreciate being here.
Allie Carey
Thank you so much everybody for tuning in.
