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Advisors Shouldn’t Fear Losing Clients Over Fees

November 17, 2016

High net worth clients are asking their financial advisors about their fees. But it doesn’t mean they would jump to a lower-priced competitor — as long as the advisor offers comprehensive value, InvestmentNews writes.

About 54% of advisors say prospects and clients have asked them about their fees, according to Cerulli Associates data on advisors whose clients have $5 million or more in investable assets, InvestmentNews writes. The majority of advisors haven’t changed their fee structures in the past two years, Cerulli found, but 17% did lower fees over time. Of those, 48% say they did it to keep their clients, InvestmentNews writes.

But high fees aren’t what causes clients to leave, according to Donnie Ethier, associate director at Cerulli Associates. What clients are willing to pay comes down to the value an advisor can bring beyond investment management, he says, according to InvestmentNews.

Experts tell the publication that high net worth clients require their advisors to offer financial planning and tax advice. If FAs aren’t doing anything other than investing client money in index funds, advisors risk getting crushed by robo-advisors, John Anderson, managing director of practice management solutions for the SEI Advisor Network, tells InvestmentNews.

A recent SEI survey found that around 15% of advisors feel fee pressure from automated advice platforms, the publication writes.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.