In what could be a sign of the times for the advice space, a new report by AdvicePay shows an uptick in what financial advisors charge for fee-based financial planning services.
Drawing from more than 380,000 transactions on the AdvicePay platform, which helps users manage payments and ensure compliance in fee-for-service financial planning, the 2024 AdvicePay Fee-for-Service Industry Trend Report provides a comprehensive overview of current trends and practices in the industry.
The AdvicePay study found that in 2023, monthly recurring subscriptions for planning fees escalated to an average of $265 per client, a 6 percent rise over the previous year. Similarly, quarterly subscriptions saw a 1.6 percent rise, averaging $968 per client, while one-time payments jumped 6.7 percent to $1,578.
According to AdvicePay, the increases underscore the growing trend among advisors to broaden their service offerings to include fee-for-service models, reflecting a diversification in business practices.
The upward creep in fees might also be a reflection of an insistent gap in the market for fee-based financial planning.
"We continue to find that there are more consumers looking for financial planning than there are financial planners to provide that fee-for-service offering," Alan Moore, co-founder and CEO of AdvicePay, said in a statement.
Financial planning relationships are also sticky, with “extremely high” retention rates and “very favorable” economics based on the latest data, Moore said.
The research also showed subscription models continuing to dominate billing preferences among fee-only financial advisors, with 83 percent of all invoices issued through AdvicePay for subscription services. Digging deeper, monthly recurring invoices made up three-quarters of all those transactions, reflecting a preference for a billing cycle akin to streaming services like Netflix or Spotify.
"Clients remain receptive to fee-for-service financial planning because it aligns with their accustomed payment models for other subscription services," the report noted.
Investors have slowly but surely grown to recognize the value of financial planning advice, according to research from Cerulli Associates and Sifma, with 63 percent of affluent households today saying they would pay for financial advice – a far cry from 38 percent in 2009.
Still, most advisors in the AdvicePay survey offered more than financial planning to their clients, with close to nine-tenths (88.4 percent) also providing investment management and around four-fifths (82.1 percent) doing tax planning.
There’s also a rising tailwind behind guidance around held-away assets in 401(k)s, with 63.1 percent of advisors in AdvicePay’s latest research saying they provide that service.
Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.
Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.
It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.
Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.
Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.
Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
