Dive into the world of advisory retainers as experts share insights on structuring these agreements for maximum impact. Learn how to shift from hands-on execution to valuable strategic advice, and discover the importance of outcome-focused services. The conversation addresses common landmines to avoid and highlights the significance of setting clear expectations and response times. Explore communication techniques to enhance client relationships and recognize the vital mindset shifts needed for success in this new model.
Advisory retainers prioritize strategic guidance over traditional hourly work, allowing advisors to leverage their expertise effectively without being tied to specific hours.
Transitioning to an advisory retainer requires professionals to shift from a time-based compensation mindset to valuing results and their unique knowledge.
Establishing clear boundaries and communication protocols in advisory retainer agreements helps manage expectations and prevents scope creep, ensuring a sustainable working relationship.
Deep dives
Understanding Advisory Retainers
An advisory retainer is often misunderstood, as many equate it with traditional hourly retainers typically used in legal contexts. Unlike conventional retainers where a set number of hours is purchased, an advisory retainer focuses solely on providing high-level advice without engaging in routine operational tasks. This arrangement typically allows one key individual in the client organization unlimited access to the advisor for quick questions and guidance, thus ensuring effective communication and decision-making. The client seeks an expert's assurance on complex projects, affirming that they are leveraging the advisor's insights as a form of insurance against potential issues.
Mindset Shift in Charging for Expertise
Transitioning from a work-based payment model to an advisory retainer requires a significant mindset shift, as it may feel uncomfortable for professionals accustomed to being compensated for their direct labor. It's crucial to recognize that the value being provided goes beyond the hours spent, as clients are primarily purchasing the advisor's experience, knowledge, and ability to facilitate successful outcomes. Professionals need to understand that charging for results, rather than time, can lead to a more profitable and rewarding career path. Embracing this shift allows service providers to operate within their unique expertise and maximize their value without feeling guilty about their time efficiency.
Setting Boundaries and Managing Client Expectations
Clear boundaries and managing client expectations are essential components of a successful advisory retainer. It is vital to define communication protocols and availability clearly to prevent overstepping and scope creep, which could result from excessive access to the advisor. Establishing guidelines about response times, preferred channels of communication like Slack over email, and addressing the balance of personal life and work obligations can help maintain a professional relationship without overwhelming the advisor. This structured approach ensures that both parties understand the terms of engagement and can contribute to a more effective working dynamic.
Distinguishing Between Retainer Models
There are various types of retainers and it's important to distinguish between them, particularly when discussing advisory retainers versus maintenance contracts or execution-based services. An advisory retainer primarily involves offering strategic guidance and insights, whereas maintenance contracts may involve direct involvement in ongoing tasks or operational work. For those new to this arrangement, it can be tempting to mix these methods, but doing so may lead to misunderstandings and dissatisfaction for both parties. Recognizing the characteristics of each type of engagement allows professionals to structure their offerings more effectively and target their services to the right clients.
Navigating Challenges and Landmines
Advisory retainers can present unique challenges, including the temptation to engage in tasks outside of the agreed advisory role, which can dilute the value of the relationship. Professionals need to be vigilant against becoming overly accessible—allowing others beyond the main contact to initiate communication can lead to burnout and a shift in focus away from strategic advising. Establishing a strong framework at the onset of the engagement helps mitigate potential issues and maintains the integrity of the advisory role. By clearly articulating the terms and boundaries of the engagement, advisors can ensure they deliver maximum value while preserving their professional capacity.
How to structure—and think about—advisory retainers, including the role/importance of a guarantee.
Operating as a fractional CXO without committing to hours.
Designing extra pair of hands retainers that focus on outcomes—including productized services sold monthly.
The landmines to avoid when structuring your retainers.
The mindset shifts you’ll need to make as you move along the retainer continuum
Quotables
“In this context you're selling insurance…that's what an advisory retainer is. It's not about showing up and coding.”—JS
“When you're used to being paid for using your hands, being paid to sit on them instead feels really weird.”—RM
“The people who designed my Subaru Outback are different from the people who built my Subaru Outback and are different from the people who change the oil.”—JS
“You're not going to be able to deliver a home run to somebody who can't figure out what that looks like.”—RM
“If you're earlier in your career…and you do want some kind of stability or predictability in your income you could sell productized services on an ongoing monthly basis.”—JS
“There's no shame in doing the work and creating some kind of a retainer where you can get stability, you can get some continuity and you can build your credentials in the course of working for those organizations.”—RM
“What are you guaranteeing with an advisory retainer? The thing that I would guarantee is the response time. What they're buying is good answers fast.”—JS
“The whole idea behind advisory retainers is they're buying access—to your brain and to good answers fast.”—RM
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