Advisers give more service without getting more fees: Schwab survey

Nearly half of advisers are doing more and charging the same, according to the survey of 912 independent advisers

Jun 13, 2017 @ 1:33 pm

By Liz Skinner

+ Zoom

Financial advisers are doing more for clients without increasing the fees they charge, hoping to keep clients content and not tempted to seek out cheaper advice from competitors, including robo-advice firms.

About 44% of advisers said they are providing more services to clients and are not charging them an additional fee, according to a survey of 912 independent advisers who custody assets with Charles Schwab.

Two out of five advisers said they're spending more time working with each client without boosting their fees, according to the Schwab survey results announced on Tuesday.

(More: Advisers worry about clients leaving them over fees)

"We've been calling for fee pressure for quite some time, but instead of seeing a reduction, what we've seen is more for the same fee," said Bernie Clark, head of Schwab Advisor Services.

The introduction of digital platforms that provide financial advice and planning has added to the pressure on advisers to demonstrate why their services are worth their fees. Independent advisers typically charge about 1% of assets under management, while digital and automated advice firms charge about a quarter of that amount.

Some advisers are expanding the services they provide to clients internally, offering help with philanthropic giving, college savings strategies and life coaching, for example.

(More: Advisory firm PagnatoKarp expands concierge servcies to smaller clients)

Others are collaborating with third parties to provide clients access to tax, estate or legal help, Mr. Clark said.

Moving forward, advisers will try to attract more assets with fewer resources, and the differentiation in the services they provide will help them in the marketplace, he said.

At Heritage Financial, the advisory firm has lowered its management fees in recent years and now finds itself offering more services to clients without increasing its fees.

It's a problematic issue for the firm, said Chuck Bean, founder and chief executive of Heritage Financial.

"Clients are asking for more hands-on, white-glove service than ever before, and it is a business challenge to continue offering more services for the same fee," he said.

Some advisers also face some other discomforting business trends.

About 24% of advisers said they're investing more in technology without seeing an increase in scale to cover the expense, the Schwab survey of advisers, taken in March and April of this year, found.

About 19% said they're working more and not seeing an equitable boost in assets, according to the survey.

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