To address this challenge, we’re excited to announce the launch of AdvicePay, a new payment processing platform for financial advisors specifically created to facilitate fee-for-service financial planning fees (both one-time and especially recurring retainers). And from the client’s perspective, writing lots of checks for fees often just makes clients more fee-sensitive. By contrast, charging directly for financial planning requires managing invoices, collecting and cashing physical checks, and a process to collect for late/missed payments. They’re straightforward to calculate, the infrastructure already exists to sweep fees from investment accounts and remit them to advisors, and the AUM fee is psychologically easier for clients because it happens automatically on their behalf. Yet the caveat of this transition is that there’s an incredible operational efficiency to charging AUM fees.
This surge of interest in delivering financial planning is driving the growth of CFP certification to record levels (now more than 80,000!), but is also causing many financial advisors to question the entire AUM business model altogether after all, if the future is all about getting paid for financial planning and not investment management, then will consumers eventually compel advisors to move away from the AUM model and towards fee-for-service financial planning? In recent years, the rise of the robo-advisor has driven a realization amongst most financial advisors that it’s absolutely essential to provide value beyond “just” portfolio management itself to attract and retain clients.
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