Issue link: https://resources.envestnet.com/i/1528375
Fee structures and models for advisors Pricing is a critical component of an advisor's business and their long-term sustainability. Some factors that advisors should consider when deciding on a fee model include: Client segmentation: Who is your ideal client, what are their needs, what do they value? Are you working with clients with simple needs or more complex needs, such as estate or tax planning? Are you offering a one-time plan vs. creating a holistic plan with periodic client check-ins? Are you looking to prospect and gain new clients or prefer to maintain your current client base? How will clients pay your fee? Are you serving younger clients with more income and less assets or older clients with less income and more assets? Your value proposition By charging, you are paid to focus on the client's goals and implementing strategies to help clients achieve those goals. Your ability to understand a client's needs and objectives, the level of service you offer, the experience you bring, and the education you provide to clients should all factor into what type of fee structure you have. Consider the competitive landscape in this regard and remember that fee flexibility is critical to clients in today's climate. 63% of advisors only charge for a percentage of the plans they create and update, while 37% charge for all plans they create/update. Why do you only charge for some of the plans? My firm does not charge a fee if we manage their investments. If they are a planning client only, I charge. It depends on the complexity of their needs. Key takeaways AUM and flat fees are the most popular advisor fee models. More advisors are charging for plans than ever before. The number of advisors that do not charge a fee dropped significantly, down from 28% in 2020 to only 10% in 2023. Fee model type AUM Average: 1.05% 62% Flat fee Average: $2,554 40% Hourly fee Average: $268 18% Annual/Retainer Fee Average: $4,484 14% Subscription Average: $215/month 5% Do not charge a fee 10% FOR HOME OFFICE AND ADVISOR USE ONLY. NOT FOR DISTRIBUTION TO THE PUBLIC.