commonwealth.com
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Many financial advisors transitioned their practices to
the fee-based model 10, 15, or even 20 years ago. In the
period since, as our industry has evolved, advisors have
been asked to provide more value and services for the fees
they charge. At the same time, the costs of running their
small businesses—office space, technology, marketing,
supplies, and staff—have continued to rise. Despite the
many increases in costs, most independent advisors haven’t
revisited their pricing schedules. Maybe it’s time.
The Most Productive and Credentialed
but Charging Less
Commonwealth’s Investment Consulting Services team
spends a lot of time talking with advisors about this very
subject, and we have done a fair amount of research on it.
We have access to extensive amounts of industry data,
including industry surveys and various articles on advisory
fees. We also track, on a quarterly basis, the average fees
that Commonwealth advisors using the Preferred Portfolio
Services
®
(PPS) platform charge.
When we compared the average fees of our advisors with
those of the industry, we learned that Commonwealth
advisors generally undercharge for their services. This is clearly
illustrated in Figure 1, which shows that Commonwealth
advisors tend to consistently charge less than the competition,
regardless of the value of the assets managed.
Based on my nine years of experience working with
Commonwealth advisors—and with other advisors while
working at another broker/dealer for several years before
joining Commonwealth—I believe that our advisors are
the best in the industry. Not only are they caring people,
but they also have the highest average production in the
industry, according to
Investment Advisor
magazine’s
2013 Broker-Dealer Reference Guide.
In addition, Commonwealth advisors are among the most
credentialed in our field. More than 45 percent have their
CFP
®
certification. That percentage is almost unheard of
when compared with advisors affiliated with competing
broker/dealers. Moreover, Commonwealth advisors draw
from years of experience in the financial services business.
Still, the fees they charge don’t reflect it.
A Fresh Look at Pricing Your Advisory Business:
Blended Vs. Breakpoint Schedules
BRIAN LAMPRON, AIF®
When was the last time you thought
about your advisory fee schedule?
$0–$1M
1.30%
1.07%
1.15%
0.86%
1.01%
0.79%
0.91%
0.72%
0.90%
0.70%
0.78%
0.56%
$1M–$2M $2M–$3M $3M–$4M $4M–$5M $5M+
0.0
0.3
0.6
0.9
1.2
1.5
Average Industry Fees
Average Commonwealth Fees
Source: PriceMetrix’s FeeCheck
TM
Figure 1. Commonwealth Advisors’ Average Fees Compared with the Industry Average
Wealth Management
/ Investments & Research
