Advisors who used a fee-for-service model charged more for their services in 2023 than the prior year, according to a recent AdvicePay study.
The 2024 AdvicePay Fee-for-Service Industry Trend Report found that fee-for-service advisors charged monthly subscription fees of $265 on average last year, up 6% from 2022. Quarterly recurring fees averaged $968, a 1.6% increase from last year, and single payments averaged $1,578, up 6.7%.
AdvicePay, which provides billing and payment technology for fee-for-service financial planners, tracked over 380,000 fee-for-service financial planning transactions conducted through the platform in 2023.
Alan Moore, co-founder of XY Planning Network and CEO of AdvicePay, said advisors are more comfortable increasing their fees for financial planning. When the company first started, he used to hear advisors should charge clients around $50 per month.
“It’s just hard to build a business getting paid $600 a year,” he said. “You have to work with too many clients.”
The report also highlighted the popularity of the subscription-based model, with 83% of all invoices sent through AdvicePay being for subscriptions. Seventy-four percent of all invoices were monthly recurring.
Much like streaming video services such as Netflix, if clients aren’t finding value in the subscriptions they’re paying for, they will cancel, said Moore.
“What pricing speaks to is the value they are providing and their confidence,” he said.
Advisors have also felt the effects of inflation and, more recently, the increased pricing at vendors such as InvestCloud and Orion. As a result, advisors are incentivized to increase their worth in the eyes of their clients to justify their own higher fees. Moore said advisors can do this by adding servicing of held-away accounts, tax planning, estate planning and employee benefits review.
“They’re looking for ways to do deeper, more sophisticated financial planning on specific issues,” he said. “Because of that, we see those relationships grow.”