Issue link: https://resources.envestnet.com/i/1528375
Changing fee models Advisors are embracing various fee models beyond the traditional AUM model. It opens the door to a broader clientele base that was previously not served. The subscription model is one of those. Clients use subscriptions for gym memberships, meal kits, and streaming services. Although slower to be implemented in planning, there is potential to attract younger demographics and build lasting relationships with them as they progress in their higher earning years. One approach could be to start with a subscription model until clients reach a certain wealth level or experience a significant life event, and then transition to a fixed fee or AUM. We see some advisors offer a one-time financial plan for a flat fee, while they also offer another client continuous wealth management advice/services that includes a financial plan, investment management advice, and a long-term relationship via AUM or a retainer fee. Why? Affordability and accessibility Offering a variety of fee models allows the advisor to cater to different client segments and wealth levels. This is particularly important for younger clients or those with lower assets. Cost considerations The cost of doing business has increased and alternative fee models provide advisors with more flexibility while also remaining competitive. Alignment with industry trends As the industry evolves, advisors are adapting their fee structure to align with emerging trends and best practices. Value proposition: Advisors providing adaptive planning services (giving the right amount of planning based on the client's needs), or those including specialized services, may find that different fee models better reflect the value they provide to clients. 17% are considering changing their fee model 10% do not charge I feel it should be a basic service I provide 54% I believe it is a positive differentiator for my practice 43% I believe I have enough clients that it's not necessary 20% My firm does not allow me to charge 16% 40% Flat fee 30% Annual/Retainer fee 27% AUM 24% Subscription 21% Undecided 15% Hourly fee 1% No fee 6 FOR HOME OFFICE AND ADVISOR USE ONLY. NOT FOR DISTRIBUTION TO THE PUBLIC.