A new report from RIA aggregator Wealth Enhancement highlights fee compression challenges facing advisors, but the mega-RIA itself says some advisors are managing to push fees higher.
“We're not seeing fee compression within our organization. I know the asset management space is seeing a lot of fee compression, we're actually seeing slight fee expansion within our organization,” Dean Smith, director of business development at Wealth Enhancement, said in an interview with InvestmentNews.
“If you're able to show value through truly holistic planning - incorporating tax and trust, estate planning alongside investment management - that's true comprehensive planning. We're not seeing the fee compression because our advisors are able to go to clients and show how much value they can add,” Smith said.
Specific advisor services supporting fee expansion within Wealth Enhancement are around “mainly the tax and the trust,” Smith said after a follow-up question. “We don't do in-house estate planning, but that would be another avenue that advisors have,” he added.
“This research report examines the growing financial pressures on RIAs due to rising costs in technology, compliance, and client servicing, alongside the challenges of fee compression,” reads Wealth Enhancement’s Declaration of advisor independence report. “There is growing pressure on the traditional 1% fee, especially in higher-end client relationships.”
Minnesota-based Wealth Enhancement manages more than $117 billion in client assets and is one of the industry’s most active serial acquirers of RIAs. Its investors include private equity firms TA Associates and Onex Corporation. Wealth Enhancement bought over 20 firms last year and it made seven acquisitions in the first half of this year, according to DeVoe & Company’s latest RIA Deal Book.
Rising fee compression threats for advisors serving high-net worth clients was detailed in a report earlier this year from consulting firm Cerulli Associates. That study said that by 2026, 83% of financial advisors expect to charge less than 1% for clients with more than $5 million in investable assets.
Elevation Point CEO Jim Dickson, whose firm makes minority investments in RIAs, told InvestmentNews in May that advisors were increasingly offering property and casualty insurance to wealthy clients in an effort to combat fee compression.
In September 2024, InvestmentNews reported that Wealth Enhancement doubled its maximum annual consulting fee for charging clients to $50,000 from $25,000. Over the past year, Wealth Enhancement also ended its longstanding broker-dealer relationship with LPL Financial.
Following InvestmentNews' interview with Smith on Tuesday, a PR spokesperson from Wealth Enhancement followed up with an email on Friday:
“While we are not exactly seeing fee expansion - although some advisors have adjusted their pricing - we are seeing RIAs tend to underprice relative to wirehouses, despite often providing more comprehensive services,” reads the emailed statement. “A disciplined approach to pricing for RIAs can justify higher fees, as clients are generally willing to pay when they perceive they’re receiving strong value in return.”
A new analysis finds long-running fiscal woes coupled with impacts from the One Big Beautiful Bill Act stand to erode the major pillar for retirement income planning.
Caz Craffy, whom the Department of Justice hit with a 12-year prison term last year for defrauding grieving military families, has been officially exiled from the securities agency.
After years or decades spent building deep relationships with clients, experienced advisors' attention and intention must turn toward their spouses, children, and future generations.
The customer’s UBS financial advisor allegedly mishandled an options strategy called a collar, according to the client’s attorney.
An expansion to a 2017 TCJA provision, a permanent increase to the standard deduction, and additional incentives for non-itemizers add new twists to the donate-or-wait decision.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
