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Subscriptions: A New Pricing Model for Financial Advice?

As millennials get older and start to make more money, they are becoming an increasingly important client segment for financial advisors. This is especially true given that advisors’ bread and butter — baby boomers — continue to age. Not to mention that the $30 trillion wealth transfer is coming. Already underway is a shift in the way financial advice is priced, at least by many forward-thinking advisors who are focused on adding millennial clients to their books. Monthly subscription fees for financial advice, rather than fees based on AUM, are becoming more prevalent within the industry. The logic: Millennials are highly accustomed to paying subscriptions, from Netflix to Amazon Prime, and are less enthused to pay fees on assets, especially during downturns, than previous generations (why pay high fees for bad results?).

Financial Advice for a Monthly Fee

Heron Wealth, a NYC-based RIA, charges high earning, not rich yet clients (HENRYs — read “high earning millennials”) a $100 monthly subscription fee to manage their assets. Once their assets reach $150,000, they are switched to a more traditional annual asset-based fee of 0.75%.

Financial Gym, a financial planning company geared toward millennials, takes the subscription concept to the next level. In fact, their pricing page looks similar to what you might see on a SaaS platform.

Financial Gym provides comprehensive financial planning and personal financial management training through its team of certified financial trainers, online portal, and classes. The business aims to equip clients with the plan, knowledge, and friendly oversight needed for them to achieve their financial goals — from better budgeting to getting out of student debt and saving for retirement.

Financial Gym’s business model reflects an emerging trend within the financial advice and planning industry. A growing number of millennial-aged advisors are providing financial consultation for a monthly fee. By focusing solely on advice and planning, and not actually managing assets, these advisors have the bandwidth to take on more clients than a traditional RIA could.

According to Angie Herbers, a consultant who has a mentorship program for millennial advisors, this new, less resource intensive RIA business model allows her mentees to service an average of 135 clients — considerably more than the 85 clients she says the most efficient of traditional RIAs can handle effectively. These low maintenance millennial clients pay an average monthly fee of $215, which when applied to 135 clients over the course of a year, yields $350,000 in revenue. Since these advisors don’t sell products or manage assets, they don’t have to pay custodian fees or share revenue, enabling them to operate leanly and with little overhead.

The real point in all of this is that there is great opportunity for financial advisors who are willing to think creatively about how they price and deliver their services. The emergence of robo-advisors, shifting demographics, and changing expectations will continue to impact wealth management. A reassessment of pricing structure, namely packaging services as a subscription, is an interesting way that many financial advisors are adapting to these changes.


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