Over the past several months, Dan Solin, a best-selling author and highly regarded coach to financial advisors, has been sounding off in Advisor Perspectives about disruption in the financial advice profession (see article links below).
Five Reasons Your Asset-Based Fee Model Won’t Survive (11/14/16)
Five More Reasons the Asset-Based Fee Model Won’t Survive (11/21/16)
New Developments Imperil Your AUM Fee Model (12/26/16)
New Threats to the AUM-Fee Model (1/24/17)
Don’t be Misled by Studies on the Value Advisors Add (4/24/17)
Are you Oblivious to Fee Compression? (5/22/2017)
In his running commentary, Dan forecasts the imminent demise of the asset-based compensation model currently employed by the majority of RIAs in the U.S., and suggests that “beleaguered advisors” will have an increasingly difficult time justifying their value proposition in the face of competition from hybrid robo-advisor platforms that pair low-cost index investing with CFP guidance for an AUM fee of just 30-50 basis points.
In my opinion, reports of the death of the AUM model are greatly exaggerated and the opportunity for advisors to showcase their value propositions has never been better. For a complete counter-perspective, see the following rebuttal in Advisor Perspectives –
Why the Future is Bright for AUM Advisors (5/23/2017)
J.R. Robinson is a co-founder and CEO of client engagement software maker Nest Egg Guru and is the owner of Honolulu-based financial planning Hawaii
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