- Traditional – This is the transactional model our grandparents remember, the selling of individual stocks and bonds for commission. A great model, and one the large wire-houses still do and are successful at, but it has gotten small market, meaning focusing on extremely high liquid net worth individuals who can do this and afford the costs and fees associated.
- Blended approach -0 This where advisors charge a wrap fee or service fee for managing funds and also may charge a planning fee and get commissions for selling associated products as well. This is a great method for upper middle class and high net worth individuals who need more hands on help.
- Fee Only – This is confused with the above level a little. Fee only means that advisors are only doing a comprehensive plan and charging a concierge fee for it, and getting no revenue from anything else or any other products.
- Do it yourself – These are people who think the other methods are too costly or not efficient enough so they do it themselves. With the advent of the internet and other broker dealers this has become more popular but is not without risk.
Robo-advisors have their place though. For clients just starting with small number of assets they are a good fit to get efficient advice. However, as their needs grow and get more complex, utilizing them might still be good but a fee only approach should be added to have a more quarterback style approach. As assets continue to grow and you get closer to major life decisions like retirement or education planning, then having a more blended approach to deal with the multiple issues and have more detailed planning is more desired. Advisors need to adapt and address their marketing and their pricing to reflect these approaches and cultural sensitivities and technology adaptation to embrace the new tools but also be clear on what their value proposition is.
Rodney Mogen, is the president of solveurpuzzles, a business focused company. Helping financial advisors and insurance agents solve their case troubles and issues. Rodney is also a small business advisor focused on developing financial strategies for small business owners and helping them develop their own strategy and ideas to grow, sell, develop the way they want. He is focused on creating proper financial strategies for Advisors and business owners to assist them in their day to day duties by solving their financial puzzles. Rodney is also the Director of Financial Strategy for The Evans Group. Check out more information at www.solvurpuzzles.com and the financial strategy work for The Evans Group at www.financialselectservices.com.