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3 Ways to Grow Smart in a Fee-Conscious World


Written by: Charles Goldman, President & CEO, AssetMark, Inc.

In today’s competitive market, it’s important to deliver tangible services in every client meeting so that your client sees the value that you are adding to their lives each and every time you get together. Simple things like insurance reviews, cash flow/savings analysis, updating trust documents and discussing charitable planning can make regular meetings with your clients engaging and value added.

We all understand that adding value is what great businesses do to support price and to gain new clients. For advisors, adding value has been about growth, not price support. This month however, for the first time, we are seeing actual data that implies that advisors may be experiencing signs of price pressure. While we cannot yet tell if these data are a trend, it should be a wakeup call for all of us!

A McKinsey and Company study indicates that new high-net-worth clients are, on average, priced at 1.07%, down from 1.12% the prior year, and down from 1.15% since 2013. This is the first data that we’ve seen that shows any price pressure for advisors. Recent Schwab and Pershing studies, and our own data, do not show this decline. Also, these are for $1 million to $1.5 million households, which is a pretty narrow slice of the universe. Moreover, most studies show that million-dollar householders are well under 1% anyway. So again, I’m not sure this study shows the definitive tipping point on advisor pricing.

Related: Did You “Sell in May”? The Better Month May Be December

Even if prices are stable, we know these facts:

  • Consumer prices go down over time.
  • Investors are getting smarter about value and are demanding much more than balanced portfolios for the 1% advisor fee.
  • Major consumer media sources are running regular stories about the value of advisors, most suggesting that unless the advisor is delivering significant services beyond portfolio construction that the investor isn’t getting as much value as they should.
  • There are a new set of competitors out there with huge advertising budgets claiming to deliver holistic advice at very low prices.

So what does this mean for you? We believe that it means you must continue to find ways to provide additional value that your clients experience when they engage with you while also improving the quality of your business. Here are three concrete suggestions:

  1. Make sure every meeting with your clients has a purpose (beyond reporting quarterly performance) and that you are delivering value every time you speak with your clients and when they engage with your website.
  2. Make sure your pricing is competitive for the client you are acquiring and the services you are providing.
  3. Analyze your cost structure by client segment to be sure you know where you are making money and where you are not.

AssetMark can help you incorporate all of these suggestions. Talk to one of our practice management consultants, who can demonstrate our online resources on the eWealthManager site. AssetMark also holds regional meetings where you can get additional ideas to reinforce your value proposition and discuss and compare strategies with your peers.

Related: The 5 Rules for Effective Communication with Prospects

A little bit of analysis will go a long way to help you define what you can and should change to improve your value proposition. Now is the time!

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