Earlier this year, we released our 2024 Fee-for-Service Industry Trend Report, showcasing data from over 380,000 fee-for-service financial planning transactions processed through our platform in 2023. In our recent webinar, “Fee-for-Service Financial Planning: Unveiling Trends and Insights for 2024,” we dove deep into the future of financial planning, sharing key findings from the report.

Attendees were particularly interested in how these industry shifts are influencing client expectations and the strategic adjustments advisors and firms need to make to remain competitive. They actively participated, raising key questions on compliance, managing payment transaction fees, and strategies for comprehensive financial planning during the Q&A.

We are excited to share some of the top questions from the webinar. Below, you’ll find detailed answers and additional resources to help you embrace these new trends and enhance your fee-for-service financial planning practice.

1. Do you see other advisors passing along the payment transaction fees to clients?
2. Can I send a planning agreement and then send the invoice to the client? And is it automated or do I have to send the agreement before sending the invoice?
3. Can you say more about average monthly billing? I’ve noticed there seems to be a mental ceiling on how much clients will pay monthly (~$600/mo). Any data?
4. My compliance department prohibits charging for ongoing planning with a subscription invoice.. Can you explain how AdvicePay allows for this? I want to see if we can make it work.
5. How do we get our advisors to do more planning & charge for it?
6. How does charging for ongoing planning work when you separate the investment management?
7. Do firms pass on 100% of planning revenue on to advisors, or do they take a cut?
8. Did you say that in AdvicePay we can track the deliverables?

Top Questions From Financial Professionals

1. Do you see other advisors passing along the payment transaction fees to clients? 

At AdvicePay, we ensure full compliance with all state laws and card issuer policies, which means invoices generated on our platform cannot include processing fee surcharges. This policy is designed to keep billing straightforward and compliant for advisors, regardless of their location or their clients' payment methods.

Transaction fees are a part of doing business, and while you can't pass these fees directly to your clients through our system, there's a simple and effective solution. We recommend adjusting your overall fee structure slightly, by about 2-5%, to cover these costs. This way, you can maintain compliance and still account for the necessary transaction fees in a transparent manner allowing you to focus on delivering excellent service to your clients.

2. Can I send a planning agreement and then send the invoice to the client? And is it automated or do I have to send the agreement before sending the invoice?

Absolutely! With AdvicePay, you can send a planning agreement followed by an invoice to your client. On our Professional and Enterprise plans, you get access to a complimentary eSign integration that simplifies the process. 

Here’s how it works: 1) Upload your planning agreement, 2) Fill out the eSign template, and 3) Attach this agreement directly to the invoice. One of the standout features of AdvicePay is delaying the payment notification to the client until the attached agreement is fully signed. 

We recommend that the client be the final signer. This way, they can complete the agreement with their signature and immediately be prompted to pay the invoice. This process is designed to be straightforward and convenient, allowing your clients to handle everything in a single interaction. By following this method, you ensure that the client has reviewed and agreed to the terms before any payment is made. It streamlines your workflow, enhances compliance, and provides a user-friendly experience.

Learn more about eSignature here.

3. Can you say more about average monthly billing? I’ve noticed there seems to be a mental ceiling on how much clients will pay monthly. Any data? 

In 2023, the average monthly billing on AdvicePay was $265, though this amount can vary depending on your niche and the type of services you offer. A common approach ties fees to income. According to Kitces.com research, advisors typically charge between 2%-2.5% of their client’s gross annual income. When you view it from this perspective, it presents a vast opportunity to cater to clients who you can't serve with the AUM model. These clients may not be need to buy a product, but they are willing to pay for advice.

Charging clients on a monthly basis helps them become accustomed to paying a fixed fee regularly, similar to their other monthly bills. Aligning your fees with the value of your services and the client’s income can help overcome any mental barriers. The goal of monthly billing is to avoid disrupting the client’s cash flow. 

To effectively demonstrate the value you provide, using a client service calendar is a great approach. It clearly outlines what clients can expect from you and when, ensuring transparency and reinforcing the value of your services. Oftentimes, clients may not be aware of what you do for them behind the scenes, and this gives them a clear understanding of the work involved.

4. My compliance department prohibits charging for ongoing planning with a subscription invoice. Can you explain how AdvicePay allows for this? I want to see if we can make it work.

AdvicePay is designed with compliance in mind, providing a secure platform that aligns with regulatory requirements. We support the work of Compliance teams by enforcing workflows for their reps designed to meet regulatory guidelines. One key aspect is that client payment information is kept confidential; advisors and the home office don't have access to sensitive card details. Avoiding custody, ensuring privacy, and secure payments for both you and your clients.

Now, regarding ongoing planning with subscription invoices, AdvicePay offers several features that cater to compliance needs. Clients have the convenience of registering for a secure payment portal where they can access and manage their invoices and payments. Importantly, clients retain control over their subscriptions. They have the flexibility to cancel easily through their payment portal if needed. This empowers clients and ensures transparency in the billing process. Additionally, if there's a need to adjust the subscription amount, clients must explicitly approve any changes before they take effect. This built-in safeguard ensures that clients are informed and have consented to any alterations to their payment plans. Lastly, advisors cannot withdraw funds from client accounts without prior client approval.

We’re committed to staying ahead of regulatory changes and evolving industry standards. Our platform is continuously updated to meet the latest rules and preferences of regulators. When you choose AdvicePay, you're choosing a partner that prioritizes compliance and adapts to regulatory shifts, giving you peace of mind in your practice. Learn more about how AdvicePay keeps you compliant here.  

5. How do we get our advisors to do more planning & charge for it?

Encouraging advisors to engage more in financial planning and charge for it involves fostering an environment that supports both the advisors and their clients. Here's how we can approach it:

First off, let's talk about the importance of a compliant, scalable way for advisors to charge for financial planning.  Can you remember the last time you paid for an ongoing monthly bill with your checkbook? Me either. This is not only inconvenient for the client but is also not scalable for the advisor or home office. When clients can easily pay for financial planning services, it builds confidence in the advisor-client relationship. It's like saying, "We value your time and expertise, and we're willing to invest in it." This, in turn, encourages advisors to offer those services more readily, knowing that the payment process won't be a hassle.

Education is another crucial component. By highlighting the importance and benefits of the fee-for-service model, you're essentially painting a picture of the opportunities that lie ahead. This blog about “Why Giving Away Financial Planning for Free As A Financial Advisor May Haunt Your Practice” (yes, it is Halloween themed) has some good talking points. Overall, it's about showing advisors the tangible value they can bring to their clients' lives and the rewards that come with it. Through webinars, seminars, or even recorded sessions, you can ignite that spark of understanding and enthusiasm for the transformative power of financial planning. An easy place to start? Share the recording for this webinar with them. 

Now, let's talk about resources. Knowledge is power, right? Providing advisors with clear guidelines on what to charge and what services to offer for those charges can make a world of difference. Think of it as giving them a roadmap. The client services calendar we mentioned earlier can help them plan out their offerings throughout the year, ensuring they're providing consistent value. And let's not forget about pricing. It can be a bit of a tricky subject, but with proper education and resources on how to price their services effectively, advisors can feel more confident in their value proposition.

We are always coming out with new resources and content, so we encourage you to follow us on socials, check out our blog and free download library, or send us a note at info@advicepay.com for support. 

6. How does charging for ongoing planning work when you separate the investment management?

When it comes to charging for ongoing planning while separating investment management, we see a variety of approaches tailored to meet clients' unique needs. Many firms that distinguish financial planning fees from investment management fees often lower their AUM fee and introduce an ongoing planning fee. This ongoing planning fee is typically a flat amount, which can vary based on the level of service provided. Some firms offer tiered service packages, such as good, better, and best, or base the fee on a percentage of the client's income, usually ranging from 2-5%.

To make this process easy, our platform includes built-in fee calculators. These tools, like our complexity + AUM fee calculator, help ensure that fees are fair and aligned with the complexity of the client's financial situation and the assets managed. This approach allows for greater flexibility and customization, ensuring that clients receive the level of service that best fits their financial goals and circumstances. By clearly separating these fees, clients can better understand the value they are receiving from both their financial planning and investment management services.

Learn more about the AdvicePay fee calculators here and check out our guide on “3 Ways to Structure Your Firm’s Pricing”.

 

7. Do firms pass on 100% of planning revenue to advisors, or do they take a cut?

This truly varies on a case-by-case basis depending on what works best for the firm. Many firms do end up collecting some percentage of planning revenue, especially if they’re providing advisors with robust resources and tools for financial planning. This could include advanced software, marketing support, compliance assistance, and more, all of which contribute to the advisor’s ability to serve their clients effectively. 

Some firms have a grid system where the advisor’s share of the revenue/grid grade increases as the total revenue grows. For example, an advisor might start with a lower percentage but move up to a higher percentage as they bring in more business. This can be an incentive for advisors to grow their financial planning client base. 

Additionally, the handling of costs related to financial planning services can vary. Some firms pass off the monthly cost of platforms like AdvicePay and any associated transaction fees to the advisors, while others might cover these costs entirely as part of the advisors' tech stack. Ultimately, it is up to advisors to understand their firm’s specific policies to ensure there is a strong understanding of processes.

8. Did you say that in AdvicePay we can track the deliverables?

Yes, within our Enterprise solution, you have the ability to track deliverables. Our system is designed to enhance efficiency and accountability by providing automated notifications to advisors, reminding them to submit the necessary evidence for their deliverables. Additionally, the home office receives notifications to review and approve the submitted deliverables, ensuring a smooth and timely process.

You can easily configure the timing and evidence requirements to align perfectly with your firm's specific needs, whether you require one-time deliverables or ongoing submissions. This flexibility allows you to tailor the system to your unique operational workflows, making it a robust and adaptable tool for your firm! 

Here’s a one-page overview of deliverables you can take a look at to learn more.

Have more questions for us?

Feel free to contact us at sales@advicepay.com for assistance with the webinar, blog, or starting your fee-for-service financial planning journey. We're here to support you every step of the way!

Watch an on-demand recording of the entire webinar using the button below.