According to a recent AdvicePay study, advisors who used a fee-for-service model charged more for their services in 2023 than they did the year before.
AdvicePay's 2024 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. Recurring quarterly fees averaged $968, a 1.6% increase. from last year, and single payments averaged $1,578, an increase of 6.7%.
AdvicePay, which provides billing and payment technology to fee-for-service financial planners, tracked over 380,000 fee-for-service financial planning transactions made through the platform in 2023.
Alan Moore, co-founder of XY Planning Network and CEO of AdvicePay, said advisers are more comfortable raising their fees for financial planning. When the company first started, he heard that advisors should charge clients about $50 a month.
“It's hard to build a business being paid $600 a year,” he said. “You have to work with a lot of 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 bills were recurring monthly.
Like streaming video services like Netflix, if customers aren't finding value in the subscriptions they're paying for, they'll cancel, Moore said.
“What the award speaks to is the value they offer and their confidence,” he said.
Councilors have also felt the effects of inflation and, more recently, rising prices vendors such as InvestCloud and Orion. As a result, advisors are motivated to increase their value in the eyes of their clients to justify their higher fees. Moore said advisers can do this by adding service for retained accounts, tax planning, estate planning and employee benefits review.
“They're looking for ways to do deeper and more sophisticated financial planning for specific issues,” he said. “Because of that, we see those relationships grow.”