Seizing the Moment: Why Now is the Best Time to Raise Fees for RIAs
By: Marco Carola
01
Fee compression vs. margin compression is a common topic of discussion at financial advisor conferences.
See More
5 out of 5
RIA management fees were predicted to plummet due to robo advisors and ETFs, but the industry adapted by focusing on financial planning and adding additional services.
By adding services like tax analysis, estate planning, and insurance, RIAs justified their fees and avoided significant fee compression.
See More
5 out of 5
Increased expenses and stagnant organic growth have led many RIAs to consider raising fees on existing clients to balance profit margins.
01
Despite fears of client attrition, some RIAs have successfully raised fees by reminding clients of inflation and labor cost increases.
See More
5 out of 5
A significant number of RIAs have already raised fees or plan to do so, framing the conversation around added services and the long interval since the last fee increase.
A few clients may leave due to fee increases, but the revenue gained from higher fees often compensates for the loss.
See More
5 out of 5
Fee increases are necessary for many RIAs due to added services and increased labor costs, especially without a steady inflow of new clients.
01
Fee increases can be implemented without wholesale changes by moving lower-paying clients toward the firm's stated fee schedule.
5 out of 5
Framing fee increase conversations around additional services, increased labor costs, and the length of time since the last increase can make the discussions less difficult.