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."

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