In this blog/podcast we discuss hourly fee financial planners, the financial advisor hourly fee model, and the merits of charging by the hour for wealth management services. Some say it’s the wealth management fee structure of the future, and I myself believe that charging hourly fees as a financial advisor is a great way to increase the professionalism of your practice. So let’s get into this discussion of financial advisor fees, practice management, and the value of an hour of a financial advisor’s time.
Are you ready?
For those of you who are new to my blog/podcast, my name is Sara. I am a CFA® charterholder and I used to be a financial advisor. I have a weekly newsletter in which I talk about financial advisor lead generation topics which is best described as “fun and irreverent.” So please subscribe!
Why charging by the hour makes sense for a wealth manager
“I make more in AUM fees and so AUM pricing is the way to go and that’s it!”
Well…maybe not anymore.
Look at what search terms are showing up in Google Search, according to Neil Patel’s Ubersuggest:
You can see that there is some demand for information about financial planners who are paid by the hour (as opposed to AUM, commissions, or flat fees).
The reason that the hourly pricing model can be an advantage for a financial advisor is that is conceivably the one way that the value of a financial advisor’s time can be directly aligned with the price the client pays. Furthermore, hourly pricing alleviates many of the conflict of interest issues that go along with being compensated for a recommendation yo make, or based upon the value of assets that you manage (fee for AUM model).
As the industry moves towards greater transparency, the ability to articulate your value statement as a wealth manager is going to be more and more important. Offer clients more clarity as to the value of your services vs. the price they pay is of highest importance. In the podcast linked above, we discuss all this and more.
Why don’t more financial advisors charge by the hour?
There is the perception that hourly fee financial planners make less money, and makes the idea of charging by the hour for wealth management services a very daunting one for most financial advisors.
Furthermore, there are a slew of questions that come when someone considers becoming an hourly fee financial planner:
- Advantages/disadvantages of being an hourly fee financial planner
- What is an hourly fee financial advisor?
- What is the hourly rate a financial planner should charge?
- What is the best software for an hourly fee financial planner to use to track their time (ClickTime, GetMyTime)?
- How do you overcome the objections (fee objections, time tracking issues, scalability, etc.)
The good news is that there are several cases where charging an hourly rate as a financial advisor has worked quite splendidly. These objections and fears can be overcome! We’ve discussed these topics on the podcast at the top of the page. I hope you’ll check it out and enjoy!
Sara’s upshot on hourly fee financial planners
What’d ya think of my analysis of financial fee financial planners? Was this helpful?
Here is a marketing resource page for hourly planners. Enjoy!
Also, learn what to say to prospects on social media messenger apps without sounding like a washing machine salesperson. This e-book contains 47 financial advisor LinkedIn messages, sequences, and scripts, and they are all two sentences or less.
You could also consider my financial advisor social media membership which teaches financial advisors how to get new clients and leads from LinkedIn.
Thanks for reading. I hope you’ll at least join my weekly newsletter about financial advisor lead generation.
See you in the next one!
Music is “Arp Bounce” by Geographer