A Rs 30 crore client asks for a fee cut from 1% to 0.6% because a competitor offered it. Work out the revenue at stake and a counter-offer that keeps the client and most of the revenue.

Matching gives up Rs 12 lakh of the Rs 30 lakh a year; a tiered fee of 1.0%, 0.75% and 0.5% on successive Rs 10 crore slabs keeps Rs 22.5 lakh, a blended 0.75%. Pair it with a like-for-like comparison: if the competitor's 0.6% sits on top of about 0.5% of fund commissions, the client's all-in cost there is about 1.1%, more than the bank's current 1.0%.

Say the numbers in rupees, because percentages of percentages hide the size. At 1.0% the Kapadia client pays Rs 30 lakh a year; at 0.6% he would pay Rs 18 lakh, so matching gives up Rs 12 lakh, 40% of the relationship's revenue. Losing the client altogether gives up all Rs 30 lakh. And whatever is agreed tends to become the reference for other large clients, so the true stake is larger than one account.

Ask what the 0.6% buys before negotiating against it. A restaurant with cheaper main courses and expensive water is not necessarily cheaper. If the competitor's portfolio uses regular fund plans carrying about 0.5% a year of commissions, the client's all-in cost there is about 1.1%, above the bank's 1.0% on direct plans. This is the all-in costEverything a client pays for advice and products together: the adviser's fee plus any commissions and product charges inside the funds. comparison, and it is fair only if both are laid out line by line with the same assumptions.

Negotiate the structure, not only the rate. A tiered schedule, 1.0% on the first Rs 10 crore, 0.75% on the next Rs 10 crore and 0.5% above Rs 20 crore, charges Rs 22.5 lakh, a blended 0.75%. It rewards size, which is what the client is really asking for, and it rewards growth fairly: each new crore he adds is charged 0.5%. Compare it with matching by expected value. If the tiered offer keeps him with probability p, it earns p times Rs 22.5 lakh; matching earns Rs 18 lakh for near-certain retention. The tiered offer wins whenever p is above 80%.

Close with how you would say it to the client. Show him the all-in comparison first, then offer the tiered fee as recognition of the size of the relationship, not as a reaction to the competitor. The limit: if the client simply wants the lowest headline number and values nothing else the bank provides, no structure will hold him, and a relationship priced only on fee is one the bank may be better without.