When you’re just starting an RIA, one of the hardest questions to answer is, “What should I charge?” Since we get asked this a lot at Advyzon, I wanted to put together a guide to help firms who are just starting out figure out their pricing, and to help established firms assess if they’re charging enough.
How Much Does it Cost to Run my Business?
Many of the public debates around fee structures focus on whether to use fee-based or AUM-based pricing, what billing frequency to use, which tier structure is best, and other technicalities. But when you’re trying to figure out pricing, or if you’re re-evaluating whether your current price structure is working, start with expenses.
It’s the same advice you’d give your clients. You know the expenses you need to cover, both from a business and a personal standpoint, with your firm’s revenue. How you price your services needs to hit that revenue target. It’s the most important number to have in mind.
Start With Time
Think about how much time you spend on each client you work with. Price out both new clients and existing clients, and be sure to consider crafting their financial plan, annual meetings, quarterly reports and billing, and impromptu calls throughout the year. How many hours do you spend per client?
This should give you a sense of how many clients you can serve per year, both existing and new. (As you think through this, make sure you set aside time to manage any non-client related tasks you aren’t outsourcing.)
Once you have an idea of the number of clients you can manage, as well as your target revenue, you can start to feel out what you need to charge per client to run your firm successfully.
Start to Run the Numbers
If you’re just starting out, the most important thing is to come up with is a pricing plan, period. According to XYPN, 100% of new advisors update their fee structure after launch. So don’t expect to get everything perfect your first go around. (It’s worth noting that the majority of new advisors increased their fees after one year in business.)
Still, there are some things you can do to improve your chances of success. If you know your target revenue and how many clients you can take on, the next thing to think about is the type of client you work with.
If you start out with a book of business, you can test out different approaches to pricing using your typical client as a model. Would 1% AUM work? What about a tiered approach, starting with 2% and working down to 1%? Or, perhaps you could stick with 1% and supplement your investment management services with a flat, service-based planning fee.
If you’re starting from scratch and need to build a book of business, these numbers can help you find your niche. If you know you need to charge each client $X per year in order to make a living, you can determine the type of client you want to target. This can also help you say no to the wrong clients, which is easier than having to fire them later.
Think Beyond the Amount
It’s not just how much you charge clients, but how you charge them. If you’re starting an RIA after working at a larger firm, you’re probably used to a monthly salary. That schedule tends to work well for cash flow, since most expenses are monthly.
If you start your own RIA and bill clients quarterly, it can be challenging to plan a monthly salary. This is particularly hard if your quarterly revenue fluctuates significantly with the market, as it may if you’re charging a percentage of AUM. (Using average daily balance instead of a starting or ending balance can help with this.)
On the other hand, billing clients monthly can feel nontraditional, particularly if you have older clients who are used to the status quo.
You also need to consider how you talk about your fees and services. Or, better put, how you talk about your value. If your services feel indispensable to a client, the numbers start to matter less. Think through how you’ll discuss your offerings in a way that resonates with clients, and how you’ll continue to demonstrate and market that value in an ongoing way.
Don’t Be Afraid to Adjust
I often talk to advisors who are scared to change their pricing model because they don’t want to ruffle clients’ feathers. But, working for a fee that doesn’t feel fair, or that doesn’t serve you and your business, is a recipe for disaster.
Instead, consider changing your fees, but plan ahead to do it in a way that feels like you’re helping clients versus inconveniencing them. Start several months out by emphasizing your value in a way that sets up your new pricing model. For instance, if you want to start calculating your fee using an average daily balance, you might begin talking about the ways you manage volatility in your practice.
Next, explain the new fees and why you’re implementing them. People know that businesses need to make adjustments to pricing, and transparency often goes a long way. Plus, doing this in advance of the change gives the client time to get used to the idea and ask questions or voice concerns.
If clients do have concerns, make sure to listen and take notes. Thinking through feedback may help you in conversations with other clients, and it may help you better position how you pitch your services in the future.
An open mind may actually be the most important thing when it comes to figuring out your prices as an advisor. After all, your business runs on revenue and profit, but it also runs on people.
It’s also important to remember you don’t have to come up with your pricing in isolation. Organizations, like XYPN, the National Association of Personal Financial Advisors (NAPFA), and the Financial Planning Association (FPA), are all resources to consider if you need help with pricing. Your custodian may have ideas, as well.
Andrew Ladwig is the vice president of business development at Advyzon.
levofloxacin generic levaquin price
buy dutasteride generic celecoxib 100mg uk generic zofran
order aldactone 100mg generic diflucan tablet fluconazole 200mg for sale
ampicillin over the counter oral trimethoprim order erythromycin 250mg
order fildena 100mg generic sildenafil 100mg oral methocarbamol drug
sildenafil sale sildenafil dosage buy estrace 1mg online
order lamotrigine 200mg for sale lamotrigine uk tretinoin us
cheap tadalis 20mg voltaren online cost voltaren 100mg
buy accutane 10mg buy generic amoxil purchase zithromax pills
indomethacin pill suprax order amoxicillin 250mg us
tadalafil cost canadian online drugs order sildenafil 100mg generic
order arimidex 1 mg generic purchase biaxin order sildenafil pill
tadalafil 40mg gГ©nГ©rique sildenafil 50mg generique en pharmacie acheter 100mg viagra
order deltasone 40mg pill buy deltasone 40mg generic viagra order online
tadalafil kaufen cialis 20mg bestellen viagra 50mg fГјr mГ¤nner
order accutane for sale cost amoxil 500mg ivermectin coronavirus
buy doxycycline for sale doxycycline pills buy furosemide generic
altace for sale online buy astelin 10ml sprayer astelin 10ml cheap
clonidine brand buy catapres 0.1mg pill tiotropium bromide us
buy buspar 10mg online cheap generic amiodarone 100mg oxybutynin oral
order hytrin sale buy generic arava sulfasalazine 500 mg pills
buy fosamax 35mg sale purchase motrin pill generic pepcid 40mg
order benicar 20mg generic diamox over the counter purchase diamox sale
buy prograf 5mg generic tacrolimus tablet urso 150mg sale
order isosorbide 40mg online order isosorbide online telmisartan 80mg pill
cost zyban 150 mg cetirizine 10mg us quetiapine 100mg usa
molnunat drug buy molnunat 200mg without prescription buy lansoprazole 30mg generic
buy imuran 100mcg pill buy imuran generic buy sildenafil online cheap
order tadalafil 10mg generic viagra tablets price in india order sildenafil 100mg generic
buy tadalafil 10mg without prescription amantadine 100mg pills buy generic amantadine 100 mg
order naltrexone for sale buy aripiprazole sale abilify 20mg price
order dapsone cheap nifedipine 30mg aceon 8mg ca
order medroxyprogesterone 10mg praziquantel 600mg pill cyproheptadine 4 mg tablet
provigil 100mg oral order provigil 100mg pills ivermectin tablets uk
luvox price ketoconazole 200 mg price glipizide 5mg sale
accutane pill order isotretinoin 10mg online cheap prednisone 10mg cost
order piracetam 800mg generic viagra next day delivery purchase viagra online cheap
zithromax canada generic azithromycin 250mg gabapentin canada
coupon for cialis order cialis 20mg sale buy sildenafil 100mg online
lasix 40mg pill order plaquenil 400mg sale order plaquenil generic
order generic cialis 10mg cost clomipramine order anafranil
order sporanox 100 mg online cheap itraconazole 100 mg without prescription purchase tinidazole without prescription
glycomet 500mg over the counter lipitor 80mg brand buy generic cialis
purchase olanzapine generic order nebivolol 5mg pill buy diovan 160mg pills
oral amlodipine 5mg buy amlodipine sale female cialis pill
viagra online order cheapest viagra cheap lisinopril 2.5mg
order zyvox 600mg without prescription linezolid 600 mg over the counter play roulette free for fun
order generic prilosec real money casino games online gambling sites
order lopressor 50mg without prescription order levitra sale order levitra 10mg online
order an essay online play online blackjack real money online casino slots no download
buy levitra 10mg order levitra 20mg for sale methylprednisolonee online
paper writing online my family essay writing buy viagra 50mg for sale
clomid online albuterol buy online online blackjack live dealer
tadalafil 40mg for sale brand cialis 10mg sildenafil order
triamcinolone 10mg oral loratadine tablet clarinex online buy
buy priligy 60mg sale buy dapoxetine 30mg online cheap order levothyroxine online cheap
cialis coupons viagra 150mg viagra buy online
cheap orlistat 120mg cheap xenical 60mg buy zovirax 400mg sale
cheap cialis pills purchase clopidogrel online cheap buy clopidogrel 75mg generic
buy allopurinol 300mg pill rosuvastatin sale ezetimibe us
methotrexate cost buy warfarin 5mg generic buy metoclopramide 20mg sale
order losartan 50mg for sale losartan 50mg over the counter buy topiramate 200mg
order lioresal pill generic ketorolac toradol 10mg brand
imitrex over the counter order avodart 0.5mg pills buy generic avodart 0.5mg
buy colchicine without prescription order colchicine pills online casino game
zantac 300mg ca order meloxicam pills buy celecoxib generic
poker online for fun planning poker online online slots for real money
buy generic tadalafil 20mg ampicillin 250mg sale cipro pill
purchase simvastatin pills generic valtrex 500mg finasteride 5mg cheap
order flagyl 200mg generic order augmentin 625mg online cheap trimethoprim ca
diflucan generic purchase diflucan pill female viagra cvs
keflex 125mg pills order erythromycin 250mg sale cost erythromycin 250mg
tadalafil online buy order tadalafil 5mg without prescription buy sildenafil 100mg without prescription
viagra 100mg sale cialis drug cialis 40mg cheap
online casinos cialis usa cialis 20 mg price
order generic trazodone buy sildenafil 50mg generic aurogra 100mg canada
purchase essay online stromectol 3mg without prescription stromectol covid 19
sildenafil 150mg estradiol 2mg without prescription lamotrigine drug
order prednisone 5mg for sale accutane over the counter generic amoxicillin
female viagra pill viagra 25mg for sale cialis for sales
casino online slots cheap cialis 20mg tadalafil without a doctor’s prescription
oral azithromycin azithromycin 250mg tablet neurontin 800mg canada
win real money online casino order generic modafinil 100mg buy modafinil without prescription
order furosemide 100mg pills buy doxycycline 100mg for sale plaquenil 400mg brand
sildenafil 100mg pills order tamoxifen 20mg online order rhinocort sale
retin order online order avana 200mg generic buy avana without prescription
buy tadalafil without prescription buy voltaren 100mg online cheap indocin for sale online
purchase naprosyn online naproxen 500mg cheap lansoprazole tablet
albuterol drug proventil usa ciprofloxacin usa
order tadalafil 5mg pills buy generic cialis 10mg cialis oral
stromectol 12mg stromectol cost dapsone 100 mg brand
adalat pill purchase nifedipine without prescription purchase fexofenadine generic
ramipril 5mg cost purchase glimepiride online arcoxia price
buy asacol pill azelastine for sale online avapro 300mg us
acetazolamide 250 mg pills brand imuran 25mg imuran 25mg usa
order clobetasol online cheap clobetasol cordarone 100mg brand
purchase digoxin telmisartan 80mg cheap purchase molnupiravir
carvedilol brand buy amitriptyline online cheap elavil 10mg canada
buy amoxil 1000mg amoxicillin generic ivermectin pills canada
order alendronate 35mg without prescription fosamax buy online order ibuprofen 400mg
buy dapoxetine 90mg generic domperidone without prescription domperidone online
order nortriptyline 25mg order paxil 20mg for sale generic paroxetine 20mg
order indocin 50mg online tamsulosin 0.2mg canada cenforce generic
buy famotidine 40mg online cheap buy tacrolimus 5mg generic buy mirtazapine 30mg pills
order doxycycline generic doxycycline 100mg pills purchase medrol for sale
order generic ropinirole 1mg ropinirole over the counter order trandate for sale
oral tadalafil 10mg oral trimox 250mg trimox 250mg cost
tricor drug buy sildenafil 100mg generic cost of viagra 100mg
buy nexium 20mg clarithromycin 250mg us order lasix 40mg generic
buy tadalafil 40mg online tadalafil free samples sildenafil uk
minocin online order buy terazosin 1mg pills order terazosin 5mg pill
glucophage 1000mg us order glucophage 1000mg sale order nolvadex without prescription
modafinil 200mg canada generic stromectol purchase phenergan online cheap
clomid 50mg pill buy clomid 100mg prednisolone 20mg pills
prednisone 10mg cost order deltasone 20mg online buy amoxil 1000mg online
buy isotretinoin pill accutane 40mg brand cheap ampicillin 500mg
ed pills that work pregabalin usa order proscar 1mg generic
cost ivermectin buy ed medications online prednisone cheap
order ondansetron 8mg pills buy sulfamethoxazole sale sulfamethoxazole us
albuterol cheap buy ventolin inhalator without prescription order augmentin 1000mg pills
cheap prednisolone pill buy prednisolone 5mg generic order lasix 100mg generic
buy modafinil sale oral metoprolol 100mg cheap lopressor