Fee-based models align value with advice

By Kevin Hayes | July 16, 2025 | Last updated on July 15, 2025
3 min read
Financial advisor having a meeting with a couple at their home
Photo credit: istock/FG Trade

The increasingly competitive landscape has pushed successful advisory teams to rethink their strategies, to stay relevant with clients and prospects. Alongside this, regulatory scrutiny and the push for greater transparency have intensified, leading to natural fee compression across the industry.

Forward-thinking advisors are adapting, moving toward fee-based models that align value with advice, not just product. When implemented effectively, this shift can deepen client relationships, increase satisfaction and improve retention.

Many advisors are hesitant. Moving to a fee-based model challenges the very foundation of how revenue is generated currently. Still, few would disagree that this is the direction the industry is heading.

It shouldn’t happen overnight though. Designing a fee-based, value-driven model requires an infrastructure to support it. That includes rethinking the value proposition, redefining client service models, realigning compensation and preparing the team both philosophically and technically.

The intention is clear, but success depends on a well-executed plan, internal alignment and above all, people delivering value.

Case study: A phased switch

An independent, IIROC firm with approximately $300 million in assets under management (AUM) enjoyed a strong presence in the large-case insurance segment. The firm primarily served high-net-worth clients, with average household AUM exceeding $1 million.

At a crossroads, the two founding partners — one investment-focused and the other expert in insurance and estate planning — recognized the need to evolve. While their practices differed, they aligned on a strategic objective: adopt a fee-for-service planning model to better articulate their value, increase engagement and unlock cross-selling opportunities.

Their initial concern was perceived value. With embedded fees already amounting to $8,000 –$10,000 annually on a $1 million portfolio, would clients be willing to pay an additional fee for a standalone financial plan?

They introduced the model in phases. All new clients went through a planning process with transparent fees from day one. Existing clients were transitioned gradually, beginning with those who had complex needs or were classified as top clients.

The firm also invested in refining its planning process and enhancing its deliverables to communicate the value beyond investment management.

The impact was clear. Clients were not only willing to pay for planning, but showed deeper engagement, stronger retention and greater openness to comprehensive advice.

Planning became a cornerstone of the client experience, and a competitive advantage. In essence, it was a shift towards a family office approach. The firm’s ability to clearly articulate its planning-first value proposition improved close rates and accelerated AUM growth.

Eventually, they brought on a seasoned planner to manage complex cases, allowing the partners to focus on growth and deepening client relationships. They also began resegmenting their book, letting go of less-engaged clients and leaning into relationships where planning added the most value.

The shift also unlocked larger, more complex insurance and estate planning opportunities, doubling revenue on that side of the business in one year.

Talent strategy as an enabler

This transformation wasn’t just about process; it was enabled by a deliberate and aligned talent strategy.

Here’s how:

  1. Identifying skill gaps. They recognized the need for deeper technical expertise in planning and hired a dedicated planner to elevate deliverables and manage complexity.
  2. Freeing up capacity. With planning off their plates, the partners focused on business development and strengthening high-value relationships, no longer working in fear of losing top clients.
  3. Resegmenting the book with purpose. As the firm focused on more planning-engaged clients, roles and capabilities were structured to serve a more sophisticated client base.

Key takeaways for advisors

  • Talent is strategy. Success in a value creation model depends on the people delivering the value. Hiring, training and aligning your team around this vision is essential.
  • Avoiding evolution invites stagnation. Fee compression and changing client expectations require a proactive response.
  • Change can be phased in. A shift to a new model doesn’t have to happen overnight. Start with new clients, then gradually transition existing ones.

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Kevin Hayes

Kevin Hayes, MBA, CFP is a partner with The Vantage Talent Group.