The Price Advisors Will Pay for Ignoring Flat Fees

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I’ll take an order of flat fees (otherwise known as retainers) with a side of financial planning. Customers are lining up out the door for this.

Shall we dig in?

Defining some terms

Even within the advisor community, there’s a huge lack of clarity as to what a flat-fee advisor is and is not.

A flat-fee advisor (in its purest, truest sense) is somebody who:

  • Charges a fixed fee that does not vary over the length of the contract;
  • Provides both financial planning and investment management services for that fee; and
  • Is also referred to as a “fixed-fee advisor.”

A flat-fee advisor is not somebody who:

  • Provides financial planning for a flat fee, and investment management services for an AUM fee;
  • Provides financial planning for a flat fee, and receives commissions for selling insurance or brokerage products;
  • Offers clients the option to be charged either a flat fee, a commission, or an AUM fee. No multiple fee options provided; there is only one option provided;
  • Makes more money when the value of the assets in the client’s portfolio goes up;
  • Works for a wirehouse;
  • Is dual-registered;