Fees at a Crossroads: Adopting an Advisor Fee Model That Reflects Your True Value

This debate, playing out in the trade media and industry conferences, has pit fee-only advisers against fee-based advisers, with both sides ardently supporting their positions. And competitive pressures and the success of low-cost robo-adviser platforms are also contributing to the conversation.

But we’re left to wonder why many advisers still give away the one asset that investor’s value most: advice.

Many investors today are looking for a quarterback to oversee their financial lives and an algorithm is no substitute for a human relationship. Still, the proliferation of low-cost solutions leads us to question the status quo:

• Are we charging for advice or a commodity?

• Can advisers continue to justify an ongoing assets under management (AUM) fee when the cost for investment selection, allocation and rebalancing has declined dramatically thanks to automation?

• Clearly advisers need to be paid for their services, but what exactly is being delivered?

• And is it worth 100 bps?

While SEI’s research reports that clients aren’t always asking their advisers for lower fees, growing evidence suggests that strong market returns through the recovery have led to complacency among both financial advisers and their clients. We expect conversations may change when clients question why they’re paying 100 bps a year to lose money. As financial and investment markets have evolved over the past 25 years, the advice business needs to move ahead as well.

Download the new report, Fees at a Crossroads, where SEI joins forces with Bob Veres of Inside Information, to assess the current landscape and explore pricing trends and strategies to help advisers implement a fee model that reflects their value proposition and supports their business objectives. Primary research among advisers and consumers helps shape these views.

To download the full report, “Fees at a Crossroads”, click here now.

Primary research included two surveys conducted in 2015:

• Intermediary Survey on Advisory Fees; August 2015, n=775.

• SEI Analysis of Phoenix Marketing International Consumer Survey, April 2015, n=539.

Information provided by SEI Advisor Network, a strategic business unit of SEI. Services provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI.

SEI and Bob Veres are not affiliated. Opinions expressed by third parties are their own and SEI cannot assume the accuracy of the information provided.