Financial advisors continue their shift to an assets under management fee-based model, while experimenting with additional fee structures, according to research released Thursday by SEI Advisor Network. In particular, many advisors added a separate fee for financial planning.
However, a gap still exists between an advisor’s price and perceived value.
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These findings come from the replication of a 2015 SEI study in which 736 advisors were polled online in March. In January, SEI and Phoenix Marketing International also polled 926 U.S. affluent households with investable assets ranging from $100,000 to $5 million.
“In our 2018 updated report, we find that transparency is improving, consumers are becoming more fee-savvy and the industry is transitioning to a traditional professional service model — one that resembles the legal and accounting professions that command respect and are viewed by clients as true fiduciaries,” John Anderson, head of practice management solutions for the SEI Advisor Network, said in a statement.
“Today’s consumer is driving change and continues to push advisors to more client-centric pricing models, which likely would not evolve if left solely to the advisor or advisory firm.”
The latest research showed that advisors were making progress in rethinking their value proposition, and were more intent on meeting client goals through financial planning and advice than in previous years.
Fifty-two percent of advisors said they had changed their fee structure within the past four years; 27% have added planning fees and retainers; and 37% have made other pricing adjustments.
In addition, 34% of advisors were segmenting their clients in 2018, up from 25% of advisors that were doing so in 2015.