There is a shift to a non-AUM fee model for advisory services, according to financial planning workflow platform AdvicePay.
The company, founded in 2018 by financial advisors Michael Kitces and Alan Moore, recently surpassed 1 million financial planning fee transactions on its platform and says this reflects demand for non-AUM fee-for-service models.
“This milestone means that fee-for-service financial planning is not just a trend; it represents a significant revenue growth opportunity for consulting firms and businesses. Advisers continue to explore and implement business models that go beyond assets under management to reach more next-generation consumers, and AdvicePay is at the center of this change,” said CEO Alex Sauickie, adding that this is just the beginning for the company. .
AdvicePay was included in Inc.com’s list of fastest growing private US companies and saw a 102% increase in advisors added to the platform, with transactions up 193%.
INDUSTRY CHANGE?
Co-founder Michael Kitces said the breakthrough delivers a solution that advisers needed.
“At the time of AdvicePay’s launch, financial advisors weren’t engaging in subscription fee models because they couldn’t; collecting a high volume of paper checks was simply not scalable and collecting customer bank account information to bill them directly caused custody issues,” said Kitces. “So we built AdvicePay to specifically solve that problem: How to efficiently, compliantly and scale expand their financial planning fees with recurring revenue beyond AUM.”
Kitces compared what the firm did to the technology platform that Schwab Advisor Services launched in the 1990s, which enabled independent RIAs to be able to bill AUM fees at scale for the first time, catalyzing a whole shift in industry business models.
He believes his company is well positioned to drive the next big industry business model shift to fee-for-service financial planning.
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