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4 Innovative Pricing Structures for Wealth Management Service

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Earlier this year the Simon-Kucher & Partners consulting firm issued a report titled The Future of Fees — Real Life Pricing Innovations in Wealth Management. The report explored eight fee models advisors have employed as alternatives to the traditional approach of charging a percentage of assets under management.

Wei Ke, Ph.D., one of the report’s authors commented that “the future of fees is not a shift from the traditional AUM to a new fee model. Rather, the future will be characterized by more diversity where a variety of fee structures will emerge to meet the needs of new and underserved client segments and changing market conditions.”

The Simon-Kucher report focused on innovations in pricing by financial advisors within their practices. But the same transformation in pricing alternatives is taking place among firms that serve financial advisors. These innovations are creating the type of rich diversity of pricing options for financial advisors predicted by Dr. Ke.

Here are some examples:

1. First Ascent Asset Management. In 2016 First Ascent, of which I am CEO, introduced flat-fee pricing to the world of turnkey asset management platforms. Up to that time, all TAMPs charged a percentage of assets under management to the advisors they served. First Ascent charges a flat $500 annual fee with a $1,000 household cap.

2. Facet Wealth. Facet Wealth offers financial planning services on a flat-fee basis. Facet’s goal is to provide comprehensive financial planning and advice to the underserved mass-affluent market. Facet offers a tiered pricing structure that varies depending upon the level of service utilized by the client. Facet will also purchase small, unprofitable planning accounts from financial advisors to help improve the efficiency and profitability of those firms.

3. Oranj. Oranj provides financial advisors with software that helps them run an efficient practice, while giving their clients an engaging, interactive experience. The software’s features include digital client onboarding, account aggregation and portfolio management capabilities.  Foregoing the traditional approach to pricing for advisor software, Oranj provides it basic software completely free, while offering optional paid upgrades.

4. FiduciaryShield. FiduciaryShield offers advisors who work with 401(k) and other retirement plans a simple, one-stop, online process for soliciting bids from the nation’s top recordkeeping firms. This allows advisors to quickly determine if the plans they work with are overpaying for their recordkeeping services and helps them comply with the Employee Retirement Income Security Act. There is no cost to use the service unless and until a plan uses one of the bids it receives through the platform.

5. KnowCap for Advisors. KnowCap allows advisors to pay a flat, monthly subscription fee for access to a bundle of more than 20 services. Advisors have access to website developers, graphic designers, social media experts and marketing strategists, among others.  Advisors can utilize up to four services per month and change the services they use from month to month.  Flat-fee bundled pricing saves advisors time and provides quick access to a variety of support services.   

The introduction to the Simon-Kucher report concludes with the following statement: “Moving to a new pricing paradigm will not be easy, but it is possible to take note, heart, and insight from the entrepreneurs who have walked the walk and are blazing a trail for the future of financial advice.”  The innovators identified above are leading the way.

Scott MacKillop is CEO of First Ascent Asset Management, a Denver-based firm that provides investment management services to financial advisors and their clients. He is a 40-year veteran of the financial services industry. He can be reached at [email protected].


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