XYPN Roundup: The 4-1-1 on Fees for Firm Owners

11 min read
February 27, 2020

For independent financial advisors, properly pricing financial planning services is almost always top of mind. When it comes to setting your fees, you are charged (pun intended) with a challenging task: determining the “right” price that is both profitable for you and attractive to clients.

But the challenge doesn't stop there. You not only have to determine what you'll charge for your services, but how you'll charge. And then what happens if you set a price but quickly find you're undercharging, or you decide to change your service model?

Clearly, when it comes to fees, there's no shortage of questions. Lucky for you, we have answers. We've rounded up all the blogs, podcasts, and webinars you need to navigate the nuances of financial planning fees.

How to Determine Your Services and Fees When Launching Your RIA

Malcolm Thomasby Malcolm Thomas

At XYPN, we help financial advisors become successful RIA business owners by providing the support they need to launch their own RIAs and begin their entrepreneurial journeys. While owning your own business can be one of the most rewarding experiences, it also comes with risk and uncertainty.

Our launch series program helps mitigate the inherent risk of firm ownership by providing marketing, sales, financial planning, compliance, and business support throughout each of the phases of launching an RIA.

XYPN’s program is unique compared to other RIA consulting options in that we combine the compliance and business resources with access to a community of over 950 fee-only advisors who have all at some point launched their own firm. 

XYPN Executive Business Coach Arlene Moss recently wrote about seven steps to take prior to launching your RIA firm; one of those steps is to determine the services you will provide to your clients and how you will charge for those services.

While at face value this may seem like a simple part of launching a financial planning firm, figuring out these details can actually be one of the most challenging aspects of launching.

While all the steps laid out by Arlene are equally important, we are going to dive deeper into the services and fees in particular, including what you need to determine, proper documentation, and some best practices for implementation.


Raising Your Financial Planning Fees

AlanMooreby Alan Moore

In 2017, we conducted XY Planning Network’s Inaugural Benchmarking Survey. We hired experts The Ensemble Practice to survey XYPN members to really understand their businesses. The report itself was lengthy, but the data we uncovered was valuable not only to us, but to advisors looking to succeed in their own practices.

As you may remember, Michael Kitces and I discussed the Benchmarking Survey at length in a recent XYPN Radio episode. We hit on a lot of the survey’s key discoveries: from how much firms earn in their first few years to the value of being a CFP®. We also touched on something I found very interesting: the vast majority of XYPN members raise their fees within their first year of being in business!

In fact, 61% of all XYPN members raise their fees after their first year of business. That’s a crazy high percentage of people - especially because raising fees is no small thing when you’re a business owner.


A Deep Dive Into Fees: Insights From XYPN's Annual Benchmarking Survey

Malcolm Thomasby Malcolm Thomas

For the past three years, XYPN has partnered with The Ensemble Practice to produce a benchmarking survey that measures key information about XYPN members’ firms. The goal of the survey is to provide a roadmap for fee-only financial planning firms by showing how firms evolve from launch to running a business.

The survey focuses on revenue and expenses, client services, sources of clients/business, and pricing. Each piece of information is tracked year-over-year to show trends and provide fee-only financial planning firm owners with key metrics against which they can measure their own businesses. 

The 2019 XYPN Benchmarking Survey was the most comprehensive report we have produced since introducing the survey three years ago. In addition to tracking XYPN member firm information year-over-year, we also started tracking information by business phase of the firm, allowing us to show how key firm metrics change as firms progress from launching, to building, to ultimately scaling their firms. 

We recently highlighted five noteworthy trends from this year’s study. In this blog, we will further examine the fees XYPN firms are charging and how those fees have evolved.


Choosing a Financial Planning Fee Structure – What Are the Options?

AlanMooreby Alan Moore

We talk with advisors a lot about fee-only vs. commission-only vs. fees-and-commission fee structures when they go to launch or transition their firm to working with Gen X and Gen Y clients.

Many advisors who are starting firms have only worked on the commission side of the industry, and aren’t quite sure about going fee-only. Others may have worked for large RIA’s that only charged their clients on an Assets Under Management basis, and are looking for alternative fee structures.

This is the first post in a multi-part series on determining the ideal fee structure for your financial planning firm. We'll start by talking through the different fee-structures that are used by fee-only advisors, and the pros and cons of each when working with Gen X and Gen Y clients.


How To Profitably Price Fee-For-Service Financial Planning

AlanMooreKitces.com guest post by Alan Moore

In this guest post, Alan Moore of XY Planning Network and AdvicePay, shares his thoughts on how to profitably price a fee-for-service financial planning offering, including the options for calculating financial planning fees (e.g., flat fee, hourly, project-based, percentage of net worth and income), the structure of paying advice fees (e.g., one-time fees, ongoing fees, or a combination), setting the right advice fee frequency (e.g., monthly, quarterly, semi-annual, annual), how to integrate some combination of fee-for-service and AUM fees (for firms that are looking to transition from an existing AUM model), how to make sure your fees are both profitable for the advisor and reasonable for your (niche) clientele!


5 Compliance Issues to Consider When Changing Your Fee Structure

Scott Gillby Scott Gill

Changing your fee structure to better serve Gen X and Gen Y clients might be a smart business move if you’re a financial planner with an established firm.


In the past, providing advice on an AUM model made good sense for traditional clients. The financial planning industry was built to serve the needs of the Baby Boomer generation, and the business models created along with the industry made good sense for these clients.

The main reason it worked so well: these clients had assets to manage.


Wondering if you're charging enough? You're not alone, and this on-demand  session will help you evaluate if you should be increasing your fees

One Fee, Two Services: Combining Investment Management and Financial Planning Fees

Scott Gillby Scott Gill

A growing number of financial advisors understand and embrace the importance of including comprehensive financial planning in their suite of services. With this recognition comes the need to simplify fee payments and invoicing for clients. 

At a glance, it would seem that the most effective way to accomplish this is to combine both services into one fee. There are apparent advantages to having the client pay only one fee for both the advisor and the client.

For the advisor, it simplifies the billing and invoicing process and streamlines payment processing. For the client, this method may appear more transparent and may be easier for the client to plan for and track their household expenses. 

Unfortunately there are some regulatory hurdles that require the attention of financial planners planning to implement this payment structure. 


The Value of YOU: How to Calculate the Value of Your Time as an Advisor

Brandon Mossby Brandon Moss

When someone finds out you’re in the “money business,” one question inevitably arises: “So what’s a good investment these days?”

My answer is always the same: TIME.  

And after a bit of brief banter, they hint at it again. “No really, what’s a good investment?”

 My answer to that question is, “That’s exactly the point. If you had more time, you’d research that yourself”.

But people don’t have much time anymore. Not me. Not you. Not your clients. That’s why they’re coming to you. They’d rather spend their time doing something else.

So how do we value the time that we have? And based on how we value our time, what should we be doing with it?

Most of us have seen the studies and calculations of, “If my time is worth $X, anything below that dollar amount should/could be delegated.” But before we can get to that number, we have to understand the various ways to think about it.

And we have to get to a point on a very deep and personal level that we believe our time is actually worth that amount.

So, want to know what your time is worth?


The Fees Behind "Fee-Only": The Hows, Whats, & Whys of Choosing a Fee Structure

February 2019 MPC Thumbnail - RecordedHave you ever wondered what goes into choosing a fee structure? Many advisors who are starting firms have only worked on the commission side of the industry, and aren’t quite sure about going fee-only. Others may have worked for large RIAs that only charged their clients on an assets under management basis, and are looking for alternative fee structures. In this on-demand webinar, XYPN members Grant Bledsoe, Kailie Abascal, and Taylor Anderson explore the hows, whats, and whys of choosing a fee structure. 

Watch the webinar

Finding Your Fee "Sweet Spot" as an Independent Financial Advisor: The 411 on Fees for Firm Owners

February 2020 MPC Thumbnail - Recorded

How much should I charge for my financial planning services? This is a question we hear all the time at XY Planning Network, and all too often, advisors get the answer wrong. The problem isn't that they're charging too much—it's that they're charging too little. When advisors set out on their own, they often fail to see just how much value they provide in the lives of their clients, and their fees reflect this self-doubt.

In this free webinar, XYPN members Dan Tobias and Isaiah Douglass will help you find your fee "sweet spot" and cover the ins and outs of fees as an independent financial advisor. If you're considering setting out on your own, then you'll want to watch this video!

Watch the webinar

Pricing Your Services

Event Thumbnail (16)

The million-dollar question every advisor struggles with: how should I charge for my services? This inevitably leads us to ponder several more questions such as, "Should different types of clients pay different rates?" and "How do I raise my fees without losing clients?" In this webinar, two experienced XY Planning Network advisors talk through some of these tricky questions. Joe Morgan and Helen Ngo provide some food for thought to consider as you think through your own pricing structure.

Watch the webinar

#XYPN Radio Ep #207: Shifting from AUM to Flat Fees Based on Complexity: Finding the Right Fee Structure for Your Clients - The Career of Jason Speciner

Jason Speciner_circular vignetteAfter attending Colorado State University on a football scholarship, Jason Speciner graduated with a degree in business administration in 2004 and has been a practicing registered financial advisor ever since. Today he joins the show to discuss how his firm has implemented a comprehensive services model, which he says is helping to shift the value conversation to the planning side while charging the client a simple and transparent fee. 

Listen in to learn what Jason is doing to lay the foundation for growth and hear about his experience with finding, hiring, and managing his first employee. You'll discover what it took to find the right person to help grow his firm, get his hiring tips based on what he learned, and see how his persistence has paid off. 

Listen to the podcast

#XYPN Radio Ep #213: Navigating the Regulatory Landscape for Monthly Fees in Financial Planning - With Michael Kitces and Scott Gill

Scott Gill

MichaelKitcesHow financial advisors are charging for services and what should be considered fair and reasonable for the consumer have become quite the hot button issues. Today Michael Kitces and Scott Gill join the show to dive into these topics and clarify the areas that are under scrutiny. Both men bring valuable information and advice to the issues presented and shed some light on how we can move forward as a community.

Listen in to hear Michael and Scott discuss how regulators see financial services differently, as well as how we can communicate better and more clearly to them. You will learn what specific areas and action items to work on regarding consistency and communication, what regulators are trying to evaluate, and why these regulators are being triggered in the first place.

Listen to the podcast

#XYPN Radio Ep #239: Specializing in ESG and Offering a Flat-Fee: An Interview with Scott Arnold

Scott Arnold_circular vignette

Scott Arnold is the owner of IMPACTfolio, a fee-only firm in Denver, Colorado. After starting his career in this industry—working both at Schwab and an RIA—he realized he wanted to offer impact investing to clients on a broader scale, in a personalized way. Today he joins the show to discuss how the ESG investment model impacts his business and why he decided to go from a solopreneur to a partnership structure.

Listen in as Scott shares how IMPACTfolio's flat-fee offering has benefited both his firm and his clients. You’ll learn the challenges he faced in his first year, why cyber security is one of his largest stress points, and what it takes to create a stable partnership.

Listen to the podcast

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