AdvicePay 2024 Report: Increase in Fees for Fee-Based Financial Planning

In 2023, financial advisors saw an increase in the amount of fees they were able to charge clients who engaged them in fee-for-service financial planning, according to the 2024 Fee-for-Service Industry Trend Report from AdvicePay, the industry-leading platform for processing payments and overseeing compliance of fee-for-service financial planning. Last year, monthly recurring subscriptions for planning fees rose to $265 per client, up 6% from 2022. Quarterly recurring subscriptions averaged $968 per client, up 1.6%. One-time payments rose 6.7% to $1,578, according to AdvicePay’s proprietary data. Financial advisors continue to prefer subscription models. According to the report, 83% of all invoices sent through AdvicePay were for subscriptions, and 74% of all invoices were monthly recurring. Half of all advisors bill their clients monthly, while 22% bill quarterly. Advisors reported that clients remain receptive to fee-for-service financial planning because it aligns with their accustomed payment models for other subscription services, such as Netflix. This approach enables them to conveniently compensate their advisors using their cash flow while adding an extra layer of transparency. “We continue to find that there are more consumers looking for financial planning than there are financial planners to provide that fee-for-service offering,” said Alan Moore, Co-Founder and Chief Executive Officer of AdvicePay. “What’s more, the retention rates are extremely high in an ongoing financial planning relationship, and the latest data show that the economics continue to be very favorable.” According to research issued by Cerulli Associates and the Securities Industry and Financial Markets Association (SIFMA), there has been a notable shift, with 63% of investors expressing a willingness to pay for advice, up from the 38% reported in 2009. The research also highlights a heightened demand for personalized, comprehensive advice with a focus on formal financial plans rising from 38% to 54% over the past 14 years. Most advisors surveyed offer additional services outside of fee-based planning. According to the data, 88.4% offer investment management, while 82.1% provide tax planning. Increasingly, more advisors are offering guidance on held-away accounts like 401(k)s, with 63.1% of financial advisors reporting this is a service they provide. The 2024 AdvicePay Fee-for-Service Industry Trend Report draws upon insights gleaned from over 380,000 fee-for-service financial planning transactions conducted through the company’s platform. To receive a copy of the full report, please visit https://info.advicepay.com/trends.