Redefining Client Compensation

How one LPL advisor used technology and ingenuity to revamp his client service offering

How do you gain the flexibility to provide clients the type of advice they want and need, while being compensated fairly? That’s the question LPL financial advisor Nathaniel Moore, CFP® and founder of Agape Planning Partners, sought to answer when he reevaluated his fee structure in the past year.

His solution: Provide a menu of fee options from which clients can choose, based on the type of advice they desire.

With the help of the LPL Financial Planning team and LPL’s new partnership with the planning pay portal AdvicePay, Nathan’s new fee structure is allowing him to have deeper, more meaningful interactions with clients while continuing to grow his business, especially in the current remote-work environment. Now, Nathan sees a lot of opportunity on the horizon.

A new way of compensation

The old way of charging for advice — an asset-based fee — is certainly a straightforward and fair way to charge, but Nathan noticed it really constrained his ability to offer clients flexible advice models.

“By offering all sorts of advice under that single fee structure, I would spend varying amounts of time and inevitably provide different levels of service based on the client,” Nathan says. “For example, one client simply wanted a one-time review of her bond portfolio, which didn’t necessarily require an ongoing fee or a lot of time.”

Nathan had other clients like this — who only wanted his consultation on specific topics — as well as others who needed in-depth financial plans. Each client required something different. Having a one-size-fits-all fee just didn’t seem to make sense because a one-sized-fits all approach didn’t fit his clients, and such a fee didn’t give Nathan much opportunity to grow organically.

Plus, with the increasing volatility of the stock market in recent years, especially in Q2 2020, Nathan noticed his compensation varied wildly from month to month.

“Income-based on something that changes continually makes it hard to plan,” he says, “which is frustrating when you’re running a business. I felt I needed to find a way to have a consistent income stream, uncoupled from volatility, which fairly compensated me for the advice I was providing.”

Using a service menu approach to fees

Nathan ultimately decided to solve these challenges by charging financial planning fees. “I decided that offering a menu of planning services would give me the ability to keep a relatively small client base while providing high-touch service,” he says, “and simultaneously present my clients with a variety of advice models.”

Nathan determined his minimum fee would reflect how much he generally charged to open a Strategic Asset Management (SAM) account, and he calculated the remaining fee structure from there.

“I made the choice to offer several different models,” he says. “One for a client who needs a lot of attention, an option for someone who doesn’t want to meet frequently but still wants ongoing planning, and then another for those who just need a one-time consultation. LPL’s done a great job providing a menu of how to price your fee, so setting it up was easy.”

Nathan offers clients three primary options on his menu:

• For clients who need in-depth financial planning and high-touch service: Full, consultative planning services, with quarterly discussions to analyze clients’ goals, develop strategies to work toward those goals, and review progress.
• For clients who don’t want or need white-glove service: Virtual, monthly planning services, where Nathan provides clients access to his financial planning software, along with one in-person meeting and three 30-minute phone consultations.
• For clients who just want help with one topic and don’t want to pay an ongoing fee: Single-needs planning for an analysis of one goal, account, or issue.

“I let clients know that if they select the full planning option, I’ll spend about 20 hours with them per year, and they can call or email anytime, and they’ll get an immediate response,” Nathan says. “My clients really appreciate this level of accessibility, which wouldn’t be possible from a time perspective if I simply had an asset-based fee with the same level of service for everyone.”

Nathan’s pre-COVID-19 goal was to replace a third of his income with financial planning fees, and AdvicePay has made this possible. “By using AdvicePay, I can set up my planning fees like a gym membership, so clients don’t have to rip the BandAid off once a year and write a check for $5,000,” he says. “Instead, they pay monthly, which, I think, is easier for them to swallow and aligns with the ongoing service I’m providing.”

Introducing planning fees to clients

Nathan takes what many would consider the most difficult part of a transition like this — talking to clients about how they pay him — in stride. “The more upfront and transparent you are with fees, the less I feel it’s an issue,” he says. “Every single person I’ve presented my new fee menu to has said yes to it.”

Before he ever even meets with new clients, Nathan sends them to his practice’s website, where the three service options and related fees are laid out clearly.

“When I broach the conversation about fees, they’re already familiar with how and what I charge, and they know what service level they want, so it’s not even a question,” he says. “In most cases, the clients will tell me right away what service level they want. We don’t even have to discuss the fee, because they already know.”

He handles existing clients differently, based on how they were compensating him previously. “If I have a client who’s already paying an asset-based fee, and their service level requirements haven’t changed, I’ll do financial planning services for them on a complimentary basis,” Nathan says. 
 

But for clients who may not have needed as much help when they started out with him and are now moving to the next level, Nathan will present his full, planning-based service as a new option.

“I simply tell them that I want to make them aware of the new service we’ve started that’s now available — that I have more options for how I serve them, including a white-glove option,” he says. “Most people want it. If they say, ‘no, thank you,’ they know there are services they won’t get, as they’re not part of the planning model. And they’re happy with that.”

Now, Nathan can help the client who just wants a brief consultation on an upcoming home purchase, as well as those who want to call him once a month to check on their plan. “If you show clients the value of what you’re offering, you’ll get the commitment,” he says.

Looking toward growth in the virtual world

With his new planning menu in place, Nathan is excited with the growth opportunities he sees in the future, especially now that the financial services world is getting comfortable with the virtual world due to the COVID-19 pandemic. 

“Advisors are fortunate in that we don’t necessarily need a brick and mortar location to do business,” he says, “so I’m now focusing my energy on taking advantage of the technology LPL offers to prospect for clients outside my area.”

One of the ways Nathan’s prospecting in today’s new digital world is by offering creative Zoom events for prospects and clients.

“I have to say, I’m ‘Zoomed’ out, as I know most people are, so I’m trying to make it fun and exciting again,” Nathan says. “We’ve done a virtual paint night where we mail the supplies to attendees, as well as a magic show for kids. We even did a virtual charcuterie board party, where we sent investors a charcuterie board with our firm name on it and partnered with a specialty store to ship them cheese, crackers, and meat, and then brought in a chef who demonstrated how to slice and present the items on Zoom. We’re seeing how creative we can get, and so far, we’ve had a great response!”

Nathan’s also uses MyRepChat to respond quickly to investors via text and a meeting scheduler like ScheduleOnce, which allows clients to schedule meetings at times that work for them — and he says it results in a better show rate with fewer clients canceling. Plus, he went entirely paperless and exclusively relies on eSignature when possible. Even his older clients are embracing this digital way of doing business. 

“My older clients probably embrace it most because they love not having to drive to the office!” he says.

Although the world is a very different place than even just a few months ago, Nathan is taking hold of the opportunities that exist and continuing to grow and thrive. He only sees more growth in the future and believes his new planning model, plus technology, will enable him to continue to offer high-touch service and simultaneously grow.

“With my service menu, as well as LPL’s help and technology, I can offer my clients the best service possible and continue to grow,” he says. He is, as we call it at LPL, a thrivalist.

Create your own service menu

For more on using a multi-service-model approach like Nathan, LPL advisors can search for “AdvicePay” on the Resource Center or contact LPL’s Financial Planning team to discuss your options for charging. 

The view and opinions expressed by the LPL Financial Advisor may not be representative of the views of other Financial Advisors and are not indicative of future performance or success. Neither LPL Finanical nor the LPL Financial Advisor can be held responsible for any direct or incidental loss incurred by applying any of the information offered.

Agape Planning Parnters and LPL Finanical are separate entities.