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Business Model

An outdated business model

Today’s model is focused on charging asset management fees and then giving away the one thing clients want more of and are willing to pay for: personalized advice, and financial planning.

“Nearly half of discretionary wealth management clients are dissatisfied with the fees they pay and do not trust that they are being charged fairly.”

EY 2019 Global Wealth Management Research Report

Does your investment model outperform passive investing solutions offered by Robo-Advisors enough to justify your fee? If not, then is this business model sustainable?

Research shows the marketplace is begging for more personalized advice and planning. But the traditional approach of charging on AUM, while giving away advice for free, doesn’t incentivize advisors to deliver the real value that clients are looking for.

Additionally, the old product sales-focused model doesn’t value ongoing advice and planning—it just uses some planning to justify the sale of products to clients. It is still pushing products and missing what the market is actually demanding—personalized advice and planning.

In order to meet the needs of the next generation of clients, advisors need to adopt a new business model that rewards and incentives planning work and allows them to keep 100% of the revenue from their planning fees. For the advisor, time is your most valuable asset. When you spend your time and your expertise delivering personalized advice and planning to your clients, you should get to keep all of the revenue generated from that work.


In the new model, advisors are compensated for their thinking, their approach, and their ongoing strategic recommendations.

We believe this is what the best advisors want to offer to their clients. It’s time we are rewarded for delivering this value to clients.

Many advisors are stuck in platforms that have minimum account sizes or mandated client fee structures, and they are disincentivized to charge a fee for planning because they are not compensated fairly by their firm for doing that work. Advisor compensation is too often not aligned with financial planning activities but instead is aligned with assets under management or product sales.

Clients are looking for more transparency around the fees they are paying, and they are scrutinizing the fees they are charged relative to the value they are getting.

If your only stream of revenue is from an AUM fee or commissions from selling products, what happens when your clients decide they can passively invest their own money and save the 1% AUM fee?

Or when they decide they don’t need to buy any more products from you? By then, it will be too late to try to convince them that your real value is in the planning and advice that you deliver to them.

As professionals, we measure and track our success based on what we monetize. If you are only monetizing assets under management, are you really delivering personalized financial planning and advice to your clients?

Interested in learning more?

Lifeworks is taking on a limited number of qualified financial advisors in Q1 2021. For a confidential demo of our platform and conversation about the future of your practice, schedule a time to talk with one of our team members.

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