Amid challenges that include the COVID-19 pandemic, increased competition and growing pressure on advisory fees, LPL Financial advisors should start charging a separate fee for their planning services if they are not yet doing so, executives at the firm suggested at the firm’s first virtual Focus conference.
By charging for planning, advisors can build and grow relationships with their clients and increase revenues, while better differentiating themselves from rivals, Andy Kalbaugh, managing director and divisional president, national sales and consulting at the firm, said Wednesday during the Focus Live session “Financial Planning: How Much?”
“We used to talk about this topic in terms of to plan or not to plan — that was the question,” he said, putting a spin on a classic line from William Shakespeare’s play “Hamlet.”
“But it’s really not anymore — you’re all planners now,” he told attendees. “As an industry, we probably made it a little more difficult than it needed to be,” he conceded.
However, “we simplified things, and technology’s made it much, much easier,” he said, adding: “At a time when it’s getting harder and harder to differentiate, planning can solve complex issues and it can help you really stand out in the crowd.”
“There’s been a slight misalignment [on] the value that advisors deliver and how they’re compensated,” Matt Enyedi, managing director, national sales and consulting at LPL Financial, interjected.
“While advisors are delivering planning at some level to all of their clients … the reality is very few are actually charging for planning explicitly,” he pointed out. Instead, many times, they are just including that service as part of the advisor fee or it is being waived if the client hires them to manage their assets, Enyedi noted.
“My concern is this: Advisory fees, as we’re seeing, are beginning to come under pressure, and asset management becoming increasingly difficult to differentiate with,” Enyedi told attendees.
As a result, the advice that advisors are providing through planning is “what’s really driving the value in the client relationship — but you don’t charge for it,” Enyedi said, adding: “I think the real question becomes to charge or not to charge.”