ACTIONABLE ADVICE FOR FINANCIAL ADVISORS: Newsletters and Commentaries Focused on Investment Strategy

Follow us on
 Facebook  Twitter  LinkedIn  RSS Feed

    Last 14 days

Most Popular Articles


Most Popular Commentaries

    Last 12 Months

Most Popular Articles


Most Popular Commentaries



More by the Same Author

Equities
   Common
   Value
Financial Planning
   Financial Planning
Investment Strategies
   Passive vs. Active
   Portfolio Management
Investments
   Investments
Practice Management
   Compliance
   Fees
   Marketing
   Practice Management
Six Reasons You're Charging the Wrong Fees
By Bob Veres
May 28, 2013


Go to page 2, 3, 4, Next     Bookmark and Share  Email Article   Display as PDF   Remind Me Later

Bob Veres

Over the past nine months, a growing number of the members of my Inside Information community have asked me to poll advisors on what and how they're charging their clients – a follow-up to an article I wrote for Advisor Perspectives

The original article found that most advisors are charging less than the market will bear for their services, and suggested that Adam Smith's Invisible Hand was inexplicably missing in action.  But it left a lot of important questions unexplored: 

  • How much are advisors actually charging their clients?  Is there a wide or a narrow spectrum around the fee structures that everybody uses?  
  • Is there a trend from AUM-related fee structures toward retainers or hybrid (retainer plus AUM) models?  Are hourly fees anywhere in the picture?
  • How are advisors calculating their retainer fees?  Based on what?
  • How much are advisors charging (if at all) for their initial planning work?  How is that fee determined?

Are you willing to accept an unfair advantage as you build your business?

Bob Veres

Bob Veres's Inside Information service takes you right to the cutting edge of new ideas, business-building insights, investment paradigms and marketing strategies as they arise from leading thinkers around the profession.

The service has been described as an "unfair advantage" by subscribers who are now among the most successful advisors in the business.

Knowledge is power. Try a year of Inside Information, with a money-back guarantee: www.bobveres.com, and give yourself the unfair advantage that you deserve in your professional career.

Best,

Bob Veres
Inside Information


To get the answers to these questions and others, I sent out a questionnaire.  This was not directed through any formal polling device; it was simply an email with questions (and a few follow ups) to 1,050 Inside Information readers.  I did it this way because I was interested in more than just the raw numbers, which is all these formal polls typically provide.  I wanted to hear what people had to say about what and how they were charging their clients, what challenges they've faced, how their fee structure has evolved over time, if they've raised their fees recently, and if so, how they communicated this to their clients, and what the response was.

By the middle of May, I had more than 150 responses and 119 different descriptions of fee structures.  Many of the responses covered pages of explanations.  Out of that material, I created a report entitled Fee Samples, which explored the spectrum of advisory fees in considerable detail, and allowed advisors to compare their fee structures with professional norms, evolving trends and the input of advisors around the country.

The full report, available to members of the Inside Information community, confirmed my initial suspicion: that fee structures may be the least standardized, least logical part of the financial advisory business.

Here are the six biggest oddities that were visible in the report – each of which is a clear sign that advisors are not charging as much as they should.  As you read them over, ask yourself if you can think of any other profession to which any of them would apply.

Go to page 2, 3, 4, Next

Display article as PDF for printing.

Would you like to send this article to a friend?

Remember, if you have a question or comment, send it to .
Website by the Boston Web Company