If there's one thing that could help advisors drum up new business, it's offering fee-based services, according to an industry report this week from AdvicePay.
The RIA billing and payment company, founded in 2016 by Michael Kitces and Alan Moore, says that institutional firms that sign up for its service see a 10-fold growth in advisors using it within the first two years. And importantly for advisors, those who offer financial planning through such a fee-based service have seen their net new assets increase more than three times faster than advisors who don’t, according to AdvicePay.
The firm’s report represents the first time it has widely shared data about how advisors use the service.
Fee-for-service arrangements represent a massive opportunity for advisors to expand business, as most American households have less than the $250,000 in assets that planners have typically required to work with a client, according to AdvicePay. Currently, 90% of households don’t work with an advisor, the firm noted.
“The addressable market proliferates. To me that’s a big deal from an enterprise growth opportunity, because it essentially means you get to start working with clients that are green fields, blue oceans, instead of having everybody chasing the same number of households that have investments that are available to manage, transferable, liquid and willing to delegate,” Kitces said in the company’s report. “That’s only a pretty small segment of the marketplace.”
Among other findings from AdvicePay are that 83% of invoices sent through it last year were for subscription billing and that the average monthly subscription cost was $250, a 4.8% increase from the average in 2021.
Nearly three-quarters of advisors using the service bill clients on a monthly basis, and those using subscriptions saw a more than 450% increase in revenue from those sources within two years of signing on with AdvicePay, according to the report.
AdvicePay co-founder and CEO Moore announced last month that he'd be stepping down from the top position at the firm this year to serve as the full-time CEO of XY Planning Network. After stepping down as CEO, Moore will be executive chairman of the board at AdvicePay.
The company initiated a search for a new CEO in February on social media and said at the time that it had received interest from “a few dozen qualified candidates.”
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