Do you give free advice?
While you likely give friends advice about love, careers, parenting and many other topics, why not give advice about money?
There’s an old joke – a psychologist is talking to a lawyer at a cocktail party and says, “Everyone asks me for free advice. What should I do?”
The lawyer replies, “Well, send them a bill!”
The next day, the psychologist checks his mailbox only to find a bill from the lawyer.
Jokes aside, businesses aren’t charities, but that doesn’t stop people from asking professionals for free advice.
Sometimes free advice leads to business, but this transition may not happen as often as expected. Free advice still carries liability, and you can be sued for wrong advice.
Having a good strategy for building your business is key, which may or may not include pro bono work. Either way, being upfront about fees are characteristics of a good businessperson and set the ground rules for client relationships.
“If I give good advice, the person usually doesn’t appreciate the value and that it’s the accumulation of school, training and experience,” said Randy Kessler, founding partner of law firm Kessler & Solomiany. “It’s hard for people to understand the value because unless they’ve seen someone go through a similar issue, will they credit me?”
Your rate is your worth
“The rate is how professionals separate themselves,” said Randy.
A client may not respect you unless you respect your time and know the worth of your advice and services. People will pay to ensure that their issues are handled with a certain level of care and that there won’t be any mistakes – they want all the i’s dotted and t’s crossed.
Be clear about fees and rates
“People call all the time for a five-minute question – it’s never a five-minute question, ever,” said Randy.
Part of setting the boundaries on the client relationship is determining when to start charging, which may be after someone asks that very first question.
“Establish the ground rules early on,” said Randy. “You have to outline how you charge for your time. It might sound uncomfortable, but you can’t start talking and then send them a bill.”
“While some professions can easily quantify their work, accountants sometimes work behind the scenes and their worth is not immediately seen. This is why it’s important to be upfront about hourly rates, fees, time involved and total costs for services provided.
Stay true to your model
Every professional handles their billing differently, and some may have at least two to three meetings with potential clients before deciding whether to work together. Sometimes more complex clients may require more meetings.
These meetings are when the client and professional can take the time to figure out whether they want to work together and what strategy might work for a client. Even so, the paid work and analysis begins after the client signs on.
“If they don’t like me, they go away,” said Leonard Wright, CPA. “If they like me, they become a client. As part of the communication process, people will self-select out or become a client. Every once in a while, people linger on the fence, but that doesn’t happen often.”
Nothing is ever really free
For someone just starting out, giving free advice may seem like a good strategy to build a customer base, but providing free services is an expensive way to get clients. Your generosity might send the wrong message that you need the business.
“If you give free advice, you’ll spend all your time trying to get clients – you might as well go on the street with a sign on your chest that says, ‘Please hire me’,” said Randy. “The better professionals are the ones who can afford to charge for a consultation.”
Be social during social settings
Giving drive-by advice over cocktails to someone (whose situation you are not familiar with) is not a good strategy, suggested Leonard. Instead, turn these situations this into business opportunities.
“When people ask for free advice at cocktail hours, the boundary is, ‘Great questions. I don’t know you – let me get your card, and my staff will follow up and we’ll talk about it in depth.’ You have to set the boundary to not talk about work at cocktail hours. That’s a time to meet people, but you don’t give free advice.”
About the author
Andrea Murad is a New York–based writer. Having worked on both Wall Street and Main Street, she now pursues her passion for words. She covers business and finance, and her work can be found on BBC Capital, Consumers Digest, Entrepreneur.com, FOXBusiness.com, Global Finance and InstitutionalInvestor.com.