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The financial industry is a leader in showering bonuses on new clients while taking existing customers for granted.

I recently wrote about the big banks offering $300 in cash or, in one case, a free iPad, to people opening new chequing accounts where you get unlimited transactions. That prompted a message from the mutual fund company Steadyhand to point out something the company does strictly for its long-term clients.

Steadyhand clients with five to 10 years at the company have their fees cut by 7 per cent; after 10 years, fees are cut by a total 14 per cent. Loyalty to long-term customers - what a concept. If they understand what Steadyhand is doing, maybe more people will be inspired to ask their banks and investment firms for a loyalty discount.

Steadyhand began the practice as a way of making an impression as a new player in an industry dominated by companies with decades of history. “I won’t deny that we had a marketing element to it - we’re trying to build a firm,” said Tom Bradley, chairman, chief investment officer and co-founder at Steadyhand.

But there’s also a fairness argument that Mr. Bradley linked to an experience he had years back while renewing a subscription to a magazine he’d been reading for ages. It turned out that the cost for new readers was lower than the one for people re-subscribing.

For many companies in the investment industry, the idea of lowering the cost on longtime accounts would never get serious consideration because of the loss of revenue. As a younger company with a history going back to 2007, Steadyhand was able to follow through on this. In fact, the company sees an economic case for cutting fees for long-time clients.

“New clients cost us more - you spend more time with them to get them set up,” Mr. Bradley said. “But if you’ve had someone for three, five, seven, 10 years, the reality is that it just costs us less to work with them.”

If you had $50,000 invested in the Steadyhand Founders Fund (it’s a balanced fund), a 7 per cent discount would bring your management expense ratio to 1.25 per cent from 1.34 per cent and a 14 per cent discount would put the MER at 1.15 per cent (these numbers can be verified on Steadyhand’s fee calculator). Like many other investment firms do, Steadyhand also reduces fees as client assets grow.

Mr. Bradley was blunt in saying the loyalty fee discounts don’t much impress new investors. “Where it’s been really important in cementing our relationship with existing clients.”

Right, existing clients. They’re the people who too often see the financial companies they’ve long done business with give preferential treatment to newcomers.

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