AdvicePay Financial Advisor Community Blog

Financial Advisor Marketing - Best targets for retainer fees

July 24, 2018 By Alan Moore, MS, CFP®
Alan Moore, MS, CFP®

Financial advisor marketingIf you’ve decided to make the switch from a commission-based model to a retainer fees model in your financial advisory business, congratulate yourself. You are clearly up-to-date with the latest trends in your industry and have the gumption to explore new frontiers. Your next step is to figure out who the best targets are for your newly adopted monthly fee structure. The quick answer is younger clientele. A commission-based model works better for more established clients with a large asset base. Retainer fees, on the other hand, work better for Gen X and Y’ers who are looking for financial advice as a stand alone service. Marketing financial planning as a standalone service to customers who have previously interacted with the AUM model can be difficult; however, approaching a completely new set of clientele who are not used to a commissioned-based model is far easier. So where do you start?

Start with your existing clients.

If you are currently in the changeover phase from a model that relies more on AUM to one that adopts retainer fees, your first marketing stop should be with your current clients. Although it may present challenges, we recommend you market your financial advisory services to them as a stand-alone service billed monthly. You should know from the outset that many people might be resistant to the change, but even having a handful of clients that are willing to adapt will help you with the crossover. At this point, maintaining your purely AUM clients will help make the transition smooth so that you do not have to put all your eggs in the retainer fees’ basket. Once you have explored your existing client set, it’s time to move on to discovering a new niche that may or may not include your original customers.

Communicate with your target niche

Think of your specific skills set, your personality type, your interests, whom you are connected to socially — and decide on a niche that you will be able to cater to better than anyone else. Whether it is teachers or outdoor adventurers, one-parent households or digital nomads, defining your target group is vital. Once you know who they are, find out what they want. Organize an informal coffee date with them where they are able to share with you what they would like out of a financial advisor. Showing this kind of interest will not only assist you in shaping this new branch of your business, but also in forming relationships with those who could translate into your future paying clients.

Set Minimums

With a younger client set, you will encounter a different set of financial advisory needs. This group may want to invest and plan and save as much as anyone else, but do not meet the minimums for an AUM model. They need a new set of criteria. Your job is to ensure that:

  • you offer types of fees that they are able and willing to pay every month,
  • your business is profitable for you.

To satisfy both of these criteria, you need to set monthly minimums per client that make sense for your business and at the same time do not exclude your new customer set. In doing so, remember to not undervalue yourself. By setting your fees too low initially, you may end up shooting yourself in the foot later on. It’s very hard to justify fee increases to your clients. Instead, take your full worth into consideration from the get-go to ensure you do not need to have that difficult conversation down the line.

Here's a guide to the financial advisor business plan for retainers with more details on financial advisor marketing.


Posted by Alan Moore, MS, CFP®

When life hands you limes, make margaritas. Alan’s entrepreneur journey began in 2012 after he was fired from his job as a financial planner and decided to start his own business. With his undergrad and M.S. in Family Financial Planning, Alan quickly put his business-building smarts and experience to work in helping other advisors start, run, and grow their own financial planning firms to serve NexGen clients. In 2016, he launched AdvicePay with partner Michael Kitces to operationalize the fee-for-service business model with technology that makes sense for the specific needs of financial planners. When he’s not starting companies, Alan lives openly as a self-proclaimed CrossFit junkie and dedicated snowboarder, a skill he is already passing along to his four-year-old son.

Topics: Retainer Model, Marketing