Hybrid billing
Firms offering financial advice and portfolio management for their clients might find a hybrid pricing structure attractive.
For example, a firm might maintain its AUM fees but offer the advisory portion as a value-added subscription.
Such a structure also works well for firms catering to age-diverse clientele. According to Javelin Research
11
, 86% of those
18-34 held a subscription to a service versus 69% of those 55+. Firms may find that older investors stick with what they're
accustomed to, while younger investors gravitate towards subscriptions.
If you choose this latter path, your billing system must be able to handle multiple pricing structures natively, or billing may
become quite complicated.
Additionally, every advisor should have the ability to bill only for financial planning services, or any other service that
their advisory practice offers, especially for those clients that are considered HENRYs (High Earners, Not Rich Yet).
Advisors without such a strategy, or the systems, to bill new clients for planning services, may be limiting the growth
of their practice. It's common for advisors to make the determination of when to include financial planning fees as a
component of their AUM-based investment management fees. For example, an advisor may establish that once a client
hits $500,000 in investment assets, the separate planning fee discontinues, and that service is now included in the
AUM-based management fee. However, depending on the complexity of the financial planning services for a given client,
some advisors may choose to continue to charge for their planning services separately, regardless of the AUM they are
managing for that client.
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