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Is It Time To Assess Your Client Fee Structure?

Fee structures in the financial advisory world have changed dramatically over the past couple of decades, largely moving away from the commission-based revenue model that was prevalent in the 1990s to an AUM (assets under management) fee model. While the AUM fee model continues to be widely practiced, new approaches are starting to gain acceptance, especially among next-gen advisors. Given these trends, it may make sense to assess whether your current fee structure is the right one for your business and whether the time is coming to make any changes.

Financial advisors get paid in a number of different ways via different fee structures. These include charging clients a fee based on assets under management, charging retainers and hourly fees, charging fees for specific services rendered, and receiving commissions for financial products sold.

Nearly 73% of advisors in the survey primarily rely on AUM fees for their revenues. – 2020 Inside Information Fee Report


Given the current environment, now might be a good time to take a fresh look at your fee structure and determine whether it’s still appropriate for your clients and your business. Increased competition from robo-advisors and the accompanying “race to zero” on trading fees—not to mention market volatility that is causing clients’ portfolios to fluctuate wildly—could indicate a need to consider some changes in your fee structure. At the least, performing a fee structure assessment may confirm that you’re right where you need to be with your fees. Click here to read the entire white paper.

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