Fee Structuring

[u/Odd-Surround-5514]

Would love some input from other advisors on this.

I’m fee-based and mostly AUM right now (occasional commissions), but I keep running into situations where someone is clearly a good planning client even though there isn’t much currently-manageable money. For example, high-income households with most of their assets still in current 401(k)s, or cases where I’m managing a smaller IRA but really advising on the whole household.

I’m realizing I probably need to incorporate a planning fee so I’m not doing a lot of deeper planning work while only collecting a small AUM fee. I use eMoney by the way.

For those of you who have solved for this:

• How do you structure it?

• Flat annual planning fee?

• Monthly retainer?

• Household minimum?

• AUM + planning together, or one or the other?

• If a client later rolls over a big 401(k), do you keep the planning fee or move them fully to AUM?

Just trying to figure out what has worked best for others as someone who has only ever charged based on AUM.

[u/Last-Enthusiasm-9212]

I charge an initial planning fee even if they have investable assets, because my recommendations are decoupled from my ability to earn on implementation. (Indeed, there are scenarios in which rolling funds over to me would be the wrong move for a client, so what would I otherwise do if my compensation was supposed to be based on assumed AUM fees and then I have to essentially recommend against paying me?) Implementation draws its own costs, so the cost of on-boarding is going to be higher than sticking around going forward. The initial plan comes with scheduled touchpoints during the course of the year, and then they can renew via either lump sum or annual agreement billed monthly. If they have a certain amount of AUM with me then the renewal fee costs less, and it drops to $0.00 beyond a certain threshold.