Every practice owner eventually says it. “Margins are tight.” It explains everything – why they haven’t hired, why they’re still on the old system, why the aircon’s been broken since February. Margins are tight. End of conversation.
Except margins aren’t usually the problem. Pricing is.
Here’s what happens. You start a practice, you set a fee. Maybe you base it on the practice down the road. Maybe you work backwards from what feels fair. Either way, you land on a number and it sticks. Five years later you’re doing twice the work per client and charging the same rand amount you pulled out of thin air in 2019.
FAIS fit and proper requirements eat more time than they used to. You’ve added portfolio reviews, tax-year planning calls, ad-hoc WhatsApp consultations, and a pile of admin you never costed in. Two-Pot has thrown another conversation into every retirement fund client relationship – withdrawal requests, tax implications, revised projections. The scope of what you deliver has grown well past what you originally priced for, and the fee schedule hasn’t moved.
“But my clients will leave”
Some might. Most of them won’t, and the fear of repricing is almost always worse than what actually happens. Clients who are getting genuine value from your advice don’t walk over a reasonable adjustment – especially if you can show them what’s changed in the service they receive. The ones who leave over a 10% increase were probably costing you more to service than you earned from them anyway. You already know who they are.
What you’re actually avoiding
The real reason most practices don’t reprice isn’t fear of client pushback. It’s that they’ve never properly worked out what it costs to service a client. The time, the admin, the compliance touchpoints, the reviews, the calls, the follow-up emails that were supposed to take five minutes and somehow took thirty. Without a real number, repricing feels like guesswork, so you leave it. Costs keep climbing. And every quarter you tell someone margins are tight.
Segment first, price second
A retiree drawing down a living annuity doesn’t need the same service as a business owner restructuring employee benefits. The hands-off investor checking in once a year isn’t the same as the one phoning every time the JSE dips 2%. A new client in accumulation phase requires completely different work from a decumulation client with a trust, a tax problem, and a complicated beneficiary structure.
If you’re charging all of them the same fee, you’re cross-subsidising. Your simplest clients are overpaying and your most demanding ones are getting the best deal in the building. That’s not sustainable and you probably already feel it in how your week actually plays out – the clients who take the most time are rarely the ones paying the most.
Clarity beats price
The fastest-growing practices aren’t the cheapest. They’re the ones that know exactly what each service tier includes, can explain it without waffling, and price it without apologising. That kind of confidence only comes from knowing your actual cost-to-serve – not top-line revenue, but what it costs to deliver advice to each segment, each adviser, each service level.
Two-Pot just handed every adviser in the country a new set of client conversations on top of an already full calendar. If you weren’t stretched before, you are now. Knowing what it actually costs you to serve each client segment isn’t a nice-to-have anymore.
Do the uncomfortable thing
Pull your fee schedule. Compare it to three years ago. Then compare both of those to what your service actually looks like today – the hours, the compliance load, the tech costs, the reviews, the WhatsApp messages at 9pm on a Tuesday.
If those numbers don’t line up, the problem isn’t your margins. It’s a conversation you’ve been putting off. And the longer you wait, the wider the gap gets.
If you want a clear picture of what your revenue looks like across client segments – not just the top line, but the full breakdown by provider, product, and adviser – that’s what we do. Visit https://www.commspace.co.za and let the numbers show you where your pricing conversation should start.
