With 'McDonald's' style menu, clients decide what they're willing to pay for

The more services they want, the more they pay — and vice versa

Jun 9, 2018 @ 6:00 am

By Jeff Benjamin

When Curtis Sheldon launched his Alexandria, Va.-based advisory firm three years ago after retiring from the military, he opted for a fee structure that let clients choose the level of service best-suited to their needs.

"The AUM model just didn't pass the logic test for me because I don't think someone with $600,000 should pay twice as much as somebody with $300,000," said Mr. Sheldon, owner of C.L. Sheldon & Co.

"I always felt like the AUM model was like a doctor charging you based on how much you weigh," he added.

Mr. Sheldon, who works primarily with active-duty and retired members of the military, has adopted a fee structure sometimes referred to as a "McDonald's menu" for the way it bundles services into different fee levels, in much the same way McDonald's bundles menu items into different value meals.

The first level, which starts at $1,800 per year, broken into monthly payments, is mostly financial coaching.

"It is pure debt management and saving strategies, with no investment management," said Mr. Sheldon, who is looking for a robo-advice platform to add to the first level.

The second level, which starts at $4,000 per year, is the financial planning level, on which the fees will climb depending on the complexity of the client's situation. And $1,000 of the annual fee covers investment management services.

Then there's the "gold-plated, wealth-management level, where we do everything," Mr. Sheldon said.

The top-level fees start at $8,000 per year, $2,000 of which is for investment management.

(More: Why the AUM fee model is so dominant)

Most of his clients opt for the middle level of service, he said.

Mr. Sheldon said he has tweaked his fees since opening up shop because he realized he was underpricing his services.

"I started with the classic impostor syndrome and was pricing my services too low," he said. "My clients know what they get if they sign up for each level."

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Behind the scenes at Pershing Insite 2018

What goes on behind the scenes at one of the industry's biggest conferences? Join us for an all-access sneak peek!

Latest news & opinion

Mutual funds feel the pinch of platform fees

No-transaction-fee options are a big hit with investors, but funds wind up paying the costs — and passing them on.

Divorce reduces retirement readiness

The new tax law could increase financial challenges for divorced people, but planning opportunities abound.

Merrill Lynch fined $42 million for misleading customers

In addition to the practice of 'masking' trades, the wirehouse went to extremes to cover up the wrongdoing.

Advisers with billions in AUM leaving Wall Street

Merrill Lynch has seen two teams exit recently, each with more than $4 billion in client assets.

Wells Fargo weighs changes to wealth unit

The move would reflect the bank's effort to cut $4 billion in costs.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print