u/PursuitTravel

I'm a fee-based advisor with approximately 95%+ of my revenue coming from AUM-fee business. In the past, my standard has been 1.5% of assets under management, and I handle all transaction, manager, platform, and nuisance fees on my end. Please, no judgement about whether you think that's too high, or whatever.

I recognize that as my business has moved upmarket in the past 2 years, this fee level is not only potentially hindering growth, but bordering on absurd. I didn't have the ability to do blended fees based on asset tiers until a little over a year ago, and now that I have my book cleaned up, I'm looking to move to a household-level blended fee, so my lower-tier clients end up coming up a little, and my higher tier clients end up going down (pretty damn significantly, actually).

I'm looking for a gut-check to see if this tiering is reasonable. I do full-scale planning, include a tax planning meeting annually, estate planning, investment management, loss harvesting... all the usual stuff, and then some. I'll also hopefully be introducing a CPA this fall, which will provide tax planning and preparation services free for anyone over $X assets under management (I don't have that number yet). This fee-tiering reduces my billed fees by $84,624, and reduces my personal top-line revenue by $66,006.

Remember that this will be treated progressively, like the tax brackets, to result in an "effective fee" for the client.

$0 - 100,000 - 1.75%

$100,000 - 750,000 - 1.5%

$750,000 - 1,000,000 - 1.25%

$1,000,000 - 2,500,000 - 1%

$2,500,000 - 5,000,000 - .75%

$5,000,000 - 25,000,000 - .5%

For some spot-checks:

$7.3mm - .82%

$6.5mm - .85%

$3mm - 1.11%

$2.45mm - 1.18%

$1.86mm - 1.24%

$753k - 1.53%

$270k - 1.59%

Thoughts? I'm OK being on the expensive side; I feel I'm worth it. I just want to make sure I'm in the realm of reasonable.

EDIT:

There are a few comments about "difficulty building a book" and "not sure if clients will go for that fee," and I realized I did a poor job of being clear in my original post. I already built a $100mm AUM book over 180 households, almost exclusively billed at 1.5%. My book used to be mostly $100k-1mm, but in the past 2 years, I've added mostly households in the $1mm-5mm range, with a few even higher than that. This has dramatically changed the makeup of my book, my revenue, and forced me to really look at how I'm handling fees.

I'm definitely taking note that 6 tiers is too complicated. I'm also taking note that my upper tier may not be scaled down enough, and that my final tier is way to vast. Unfortunately, I'm now overthinking some of this and trying to figure out how to get the target fee I want at different asset levels while still making a clear and simple fee structure. Gonna play around a bit more with this tonight.

Hi all, I'm looking to create a tiered fee system within my financial planning practice and I'm struggling to get it to work. I know SUMPRODUCT should do it, but I can't figure out how to do it properly. I am not a power user by any stretch, and I'm struggling to get this to work. What I'm trying to do is set up my charges as follows:

$0-400k - 1%

$400k-1.5m - 0.75%

$1.5m-2.5m - .6%

$2.5m-5m - .5%

$5m-7.5m-.35%

$7.5m+ - .2%

Can anyone give me some guidance on this?

I'm launching a website for my DBA fairly soon, and will be targeting HENRYs, many/most of whom will have significant equity compensation and/or concentrated employer stock positions. I consider myself very well versed on these, and the solutions that come with them. However, "very well versed" isn't good enough for me; I want to know everything I can possibly know about these areas to incorporate advanced solutions as a differentiator.

Does anyone have solid educational resources, coursework, designations, or anything else I could go through to learn more? Would CPWA, WMCP help here?