AdvicePay Financial Advisor Community Blog

How to Charge for Fee-For-Service Financial Planning

April 14, 2021 By Lana Dalton
Lana Dalton

Are you considering switching or adding fee-for-service planning to your practice? Or have you recently transitioned to become fee-only? The freedom to set your upfront and recurring fees is a huge benefit but can also be daunting if you are just getting started with this new method of charging your clients for advising services. We’re here to help you determine how to charge for fee-for-service financial planning. We’ve outlined a few tips to help you get started in determining your fees that will make your business profitable while also being attractive to your clients. 

Establish Your Niche and Research What People Are Willing to Pay

What does your ideal client type look like? First up, you will need to establish your client type and your target market. Knowing your clientele and their financial demographic will help you determine how much they are willing to pay for planning services. Figuring out who is most suitable for your business and estimating their net worth will also help drive your fee structure. Your services and pricing breakdown may result from trial and error as you listen to your clients and their specific needs. Simply put, if your clients cannot afford your offerings, you will not be able to grow your business. 


Getting Started: Hourly Based Fees

The most straightforward way to get started in setting up your fee structure is to calculate fees based on charging for the hours spent working with the client. Charging by the hour allows you to work with clients regardless of their available assets and lets you set how much your time is worth. As an added benefit, hourly fees translate to immediate revenue -- opposed to a commission-based model where the advisor will not be paid until the product sells or the commission is paid. One of the first roadblocks you may encounter is estimating exactly how much time you will be spending with your client for a given time period. However, as your business grows and progresses, you will be able to determine these fees more accurately. 


Setting Structure of Payments for Advice Fees 

After you’ve determined your fee structure, you’ll need to decide how to charge the client. The two most common methods that we see are either an upfront/one-time fee for a financial plan or an ongoing fee that could cover the original advice and any other new planning issues that may come up over the client’s lifecycle. A one-time or upfront payment ensures that the advisor is compensated for the substantial amount of time it takes to go through the initial planning process. The subscription or retainer model gives advisors the flexibility to charge for ongoing service -- by definition; a retainer agreement tends to be open-ended where clients are mostly paying for access to the advisor as needed. 


Choosing the Frequency of Payments for Advice Fees

One of the most common questions that comes up by advisors who are starting out in the fee-for-service space, is how often they should be charging their clients. Advisors have the option of billing their clients monthly, quarterly, or semi-annually. Industry trends show that most ongoing engagements bill on a monthly occurrence because most clients are already familiar with the monthly subscription “Netflix” style model. Conversely, if an advisor charges for a fewer amount of payments, the client will end up with a more significant fee which could be potentially cash-flow disruptive. Eventually, the frequency of payment will be subject to the needs and type of client being serviced. Having this kind of flexibility can be overwhelming but ultimately serves as a benefit as an advisor can truly adapt to their client’s specific needs. 

Check out this blog to learn more about how often you should bill your clients. 

In the end, you’ll want to ensure that your clients feel like they are getting the very best service and value for their money. After doing the proper research and setting up the right payment plan for your clientele, your business will inevitably grow and succeed.  

Download Our in-Depth Guide to Pricing Fee-For-Service Financial Planning



Posted by Lana Dalton

Lana is a Happiness Champion (aka Relationship Manager) at AdvicePay and loves helping enterprise users implement and optimize the AdvicePay platform. After graduating from the University of Washington in Seattle, Lana spent the past three years working in the tech industry, helping organizations implement software, create training content, and establish onboarding processes. When she’s not helping our enterprise users, you can find Lana trail running, backcountry skiing, and cooking different types of cuisine.

Topics: Practice Management, Fee-For-Service