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Growing My Firm with Fee-based Financial Planning

Bill Simonet October 6, 2021

firm growth with fee based planning

Charging a separate fee for financial planning as a service has been tremendously valuable for my firm. I believe that fee-based financial planning is a great way for just about any financial planner to profitably serve more clients and grow both AUM and revenue.

Making the change to a new fee isn’t always easy—it took some time for my firm to find the solution that was best for us and for our clients—but since finding the right fee structure, I’ve been better able to acquire, serve, and retain clients.

Finding the Right Financial Planning Fee Structure for My Firm

At Simonet Financial Group, I offer my clients a tiered fee structure with well-defined financial planning packages, including a separate AUM fee for those that want me to manage their assets.

When I started testing planning fees, I found that the flat fee was often too high to justify for many clients’ planning needs. I also found the conversation around hourly fees to be difficult, especially after working with a client for a year or more when they believed most of the work of planning was done.

Knowing the level of planning service I wanted to deliver to my clients, I believed that the tiered fee approach would be best.

To develop the planning packages and the associated fee, I had to gain a thorough understanding of the value of my team’s time, how much work went into each individual component of planning, the typical planning needs of my different client segments, and what would be an affordable yet competitive price for the planning services offered at each tier.

Once I understood these things, I was able to build out sensible, accessible planning packages for my clients.

Finding the Right Fee for My Clients

While there’s no single right way to charge for planning services, I’ve found that many clients intuitively understand the concept of planning packages. They’re accustomed to “bundling” services, like insurance products, and can quickly see which tier they’re likely to fall under. I complement this by giving clients flexibility in how they pay. They can pay for a portion of the planning services up front, and pay the rest semi-annually or monthly, whichever they prefer.

Again, this is a fee structure clients are familiar with. I was originally worried about clients constantly reassessing the value of the planning services they’re receiving when they get a new bill every month, but this hasn’t been the case.

With comprehensive financial planning services, there’s always a reason to be reaching out to someone, there is always planning work and plan implementation work to be done, so in this way, the fee is being constantly justified. An ongoing fee fits into the comprehensive planning cadence very well.

By offering my services in a clearly defined package, with billing that clients are familiar with, I can give my clients far greater transparency into our relationship. They understand exactly what they’re receiving and how much they’re paying for it. This has been instrumental in building productive financial planning relationships.

Overcoming Fee Reluctance

In my experience, I’ve found a lot of financial professionals are reluctant to charge a fee for planning because they’re afraid the client will say no. I’ve found that this rarely happens in practice, and even when it does, my firm hasn’t been impacted because my fee structure allows me to better connect with new clients who are willing to pay the fees.

When I started my career as a financial planner, I had a few difficult conversations about fees. But this was primarily due to the fact that I was justifying my financial planning fees by explaining my rates. I told clients my hourly rate and how long their plan would take to complete. This naturally drew some pushback—it also didn’t properly convey the value of planning as this conversation was focused on a one-time fee and not the ongoing work of planning where the client sees the most benefit.

I quickly overcame these kinds of objections when I started explaining my fees within the context of my planning packages. By positioning planning fees this way, clients knew exactly all the work that went into their plan throughout the year and why it was necessary to continue the work of planning year after year. It was simply a cleaner conversation that focused on the value of planning, not the cost of the planning work itself.

For clients that trust in your expertise, that you’ve built a strong relationship with, you can be confident they’ll be prepared to pay a fee. They know you’ve worked in their best interest and will continue to do so. Objections to fees are truly rare, and your firm stands to find new planning revenue and AUM by charging planning fees.

Taking a Planning-first Approach to Growth

The way I have developed a planning fee may not be what’s best for your firm or your clients. It all comes down to finding what your clients are comfortable with and what frees you up to offer the best planning services you can deliver.

Whatever fee works for your firm, I believe there are many benefits to offering planning in this way. My firm has seen several benefits.

Financial Planning Is a Better Value Proposition Than Investment Management

My business changed when I began leading with my planning services. I found it’s a lot easier to show value with financial planning and win more business than with investment management alone.

There are far more opportunities to differentiate yourself as a financial planner. With investment management, you can only really compete based on your AUM fee, which won’t mean much to a client. With financial planning, you can sell your services based on your planning philosophy, your guiding mission and vision, your core areas of expertise, and your ability to help clients achieve both personal and financial goals.

But a differentiated service model isn’t enough alone—you must charge for your services appropriately. If you lead with planning, the majority of the value you deliver is through your plans, not asset management. A fee for financial planning as a service, as opposed to AUM fees, more directly ties the value you deliver to the price being paid. Prospective clients will more easily draw a connection between the two, minimizing any potential objections or confusion regarding your fees and helping you bring on more clients.

After leading with planning, my closing rates skyrocketed and I spent far less time prospecting. I publish my fees and planning packages on my site (you can see how we present them here), so by the time someone sits down with me they really just want to get a feel for who I am and if we’ll have a good relationship. As a one advisor shop, I started bringing on three to four new planning clients every month, which has been tremendous growth for my firm.

Growing More Fruitful Relationships. Assets Will Follow!

I was bringing on more clients by leading with planning, but I was also bringing on clients who were eager to do the work of planning with me. These were prospects who had sought me out because of my planning services, not my asset management services. They were well aware of the fees I charged and what they would receive in return. These prospects often turned out to be highly motivated clients that have been a pleasure to work with.

The result has been more steady revenue for my firm. Because my sole source of revenue isn’t tied to market performance, or what clients decide to do with their assets, I can safely predict and project my firm’s revenue.

What’s more, after I’ve developed a fruitful planning relationship with someone, they, more often than not, bring their assets over to me to manage, where I can then charge a separate AUM fee for investment management. In that way, my planning services have been huge for AUM growth.

Serving More Clients

Another major way in which my business has benefited from fee-based financial planning is the ability to serve a broader client base. I can still serve my high-net-worth clients the way that I always have, but I can also profitably serve clients who don’t even have assets to manage.

The financial planning industry has historically struggled to serve those who don’t fit the AUM model of planning but need financial advice nonetheless. Charging a fee for planning as a service is a great way to reach these individuals.

This can be a particularly useful tactic for future-proofing your firm by building relationships with high-earning clients earlier in their financial lifecycle. The ability to profitably serve these kinds of clients has truly expanded the potential market and scope of my financial planning services.

Fee-based Financial Planning to Expand Your Services

Whatever type of planning fee works for you, I do believe there are several ways in which your firm and your clients could benefit. Shifting your compensation model may not be easy, but it can be worth it.

Since launching my firm, I have grown from no assets to over $20mm AUM, 200+ accounts managed, 119 planning clients, and four 401(k) plans managed. I now average 30 percent year-over-year gross revenue growth in four of the last seven years of operation as an independent, fiduciary fee-only advisor.

My firm has seen sizeable growth since finding the right fee and leading with our planning services. It all comes down to finding which type works best for your firm and your clients.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

The views and opinions expressed by this blog post guest are solely those of the guest and do not necessarily reflect the opinions of eMoney Advisor, LLC. eMoney Advisor is not responsible for the content, views or opinions presented by our guest, nor may eMoney Advisor be held liable for any actions taken by you based on the content, views or opinions of the guest.

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About the Author

Bill Simonet, CFP®, AIF® is a CERTIFIED FINANCIAL PLANNER™ Professional and Managing Principal of Simonet Financial Group, LLC. He has over 10 years of experience in the financial services industry and is committed to helping empower individuals, businesses, and families to take the financial steps necessary to live their dreams. Bill has been recognized as a thought leader with the next generation of Financial Planning professionals. His work and collaboration within the financial planning community has led to several accolades such as: “InvestmentNews Magazine 40 under 40 class of 2017” and Financial Advisor Magazine’s “10 Young Advisors to Watch 2018.”

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