Why Financial Planners Should Embrace a Subscription-based Model

Next Generation Planner: January 2022


Pat Spencer
Managing Director, Moneytree Software


Pat Spencer is managing director for Moneytree Software. Moneytree is a software development company with 40 years of experience in developing useful financial planning solutions. Moneytree works collaboratively with thousands of advisers across the country to help them confidently manage the financial journey of their clients. Moneytree was acquired by Accutech Systems Corp. of Muncie, Indiana, in 2019. Accutech has over 34 years of experience building innovative trust and wealth management solutions and provides exceptional personalized service to over 200 banks and wealth management companies nationwide.

Persuading people to hire a financial adviser is in many ways only getting more challenging. So much advice is available free online, and easily accessible consumer tools such as trading apps and robo-advisers have added to the difficulties. In fact, even social media is impacting financial decisions, with TikTok becoming one of the most sought-after online applications for financial advice with millions of videos accessible to users of all ages.1 

Financial advice, advisers know, isn’t about just stocks and bonds. Yet, the way many advisers charge for their services—assets under management—reinforces that misperception. That fee approach also can deter potential clients, who may be seeking advice in other areas, such as retirement planning or guidance on a real estate investment, in which there would be no assets for the adviser to manage. The expense under an assets under management approach can be a deterrent for people just getting started.

The flat fee for service approach offers a more affordable entry point, yet that fee structure can quickly become cumbersome as both the client and the adviser seek to do more.

As a result, advisers and potential clients increasingly are turning toward a subscription fee model. For a set monthly or annual rate, advisers provide the specific guidance people seek on a host of matters, whether the financial plans involve stock investments, business planning, debt management, tax savings, or other considerations.

The popularity of subscription-based planning fees got a boost a few years ago when Charles Schwab embraced the approach with its Schwab Intelligent Portfolios Premium product. Clients with at least $25,000 pay a one-time planning fee of $300 and then $30 monthly. Other brokerages and advisers require far less up front but charge more monthly.

The coronavirus pandemic’s early blow to the stock market—the Dow swooned 37 percent in early 2020—also reminded advisers how income tied to market performance under an assets under management approach is an uncertain return.

A subscription fee model, on the other hand, offers a host of advantages. Here’s a rundown of why transitioning to a subscription model may make sense for you. Also included are some tips to consider should you decide to make the change.

How a Subscription-Based Fee Model Can Benefit Advisers

A subscription fee can prove particularly appealing to new investors, who rushed into the market over the course of the pandemic as lower trading costs, apps that simplified trading, a rising desire to save, and cyclical market opportunities seized their attention.

Fifteen percent of all current U.S. stock market investors first began investing in 2020, according to a 2021 Charles Schwab survey.2 Schwab labeled this large group of people Generation Investor based not on their age but when they started investing.

They plan to spend more in the stock market (43 percent) versus investors before 2020 (20 percent). And they plan to spend more time managing their portfolios (30 percent compared to 19 percent).

More than half are millennials, the survey said, and here’s a fact of particular note: Half live paycheck to paycheck.

So many members of Generation Investor may not have much money to invest, yet they want to start planning for the future and want to learn more about investing and retirement planning. Traditional fee structures can fail to meet their needs. Charging a trade commission alone on stock purchases might not provide many opportunities for adviser guidance. Charging a flat fee for a retirement plan might be appealing, but as that investor gets more involved in planning and investing, a rising number of fees for individual services may no longer prove cost prudent. As well, advisers benefit from ongoing engaged conversations with clients so that the relationship strengthens around the adviser’s expertise and not what clients are reading, viewing, or hearing from other sources.

A subscription fee option, however, can prove appealing on many fronts to Generation Investor and others.

The approach can provide the potential client with continual guidance at a set price while allowing the adviser to demonstrate the range of value and services they can provide. The adviser can provide a retirement plan, guidance on saving for a child’s college education, insight into real estate investing, or myriad other avenues where the adviser has expertise and the client seeks guidance.

Not to be overlooked is how common subscription-based fees for products and services are becoming. Think of Netflix, Spotify, Amazon Prime, and many others. The approach is appealing to consumers, especially younger consumers, because it’s familiar. They know ahead of time what they’re paying for and at what price.

The subscription approach can prove to be the building block of a long and beneficial relationship between the client and the adviser. By fielding questions on a variety of topics, advisers grow sharper and more in tune with their clients’ needs.

The subscription approach also helps advisers build trust. Slightly less than half of the retail investors surveyed by the CFA Institute for its 2021 “Earning Investors’ Trust” report indicated that they trust the financial services industry.3 What builds trust, the report says, is information, engagement, advice, and investor experience.

The subscription approach can help build inroads into each of those factors by allowing the adviser to provide data relevant to the client’s goals, communicate with the client on a more regular basis, offer advice absent any perception of market incentives, and overall help to make the client better informed on the choices they make.

As the relationship evolves, pricing can adjust. If the client wants fewer services, the adviser can lower the fee yet retain the client. If the client wants more services, the adviser can raise the fee or perhaps shift more of the cost toward a blended model using assets under management as well. Either way, the client maintains value and the adviser maintains income proportional to the time commitment.

Competitive pressures in the financial management industry have been pushing traditionally set fees lower. A subscription model can help generate new income as well as smooth some of the peaks and valleys under an assets under management plan.

Offering a subscription plan also helps planners compete with online brokers and other advisers who already are offering subscriptions.

The benefits of including a subscription option in your fee structure is clear. There’s a growing number of new investors who want advice and a more appealing way to pay for it. Meanwhile, there’s a growing number of competitive pressures pushing traditional fees downward, which compounded by market volatility can affect adviser income.

Implementing a Subscription-Based Fee Model

Use a blended model. The transition to a subscription model need not mean abandoning other fee structures, particularly those that are working well for existing clients. Whether you are using assets under management, performance-based or commission-based approaches, or some hybrid, begin offering subscriptions as part of your menu of services to reach a broader audience.

Break down why clients need an adviser. Clients may need an adviser for a one-time event, say, a 401(k) rollover or another type of life transition. Build out a pricing schedule that fits for the one-time event but also the periodic and ongoing events in people’s lives that should involve financial advice. Provide specific relevant examples so potential clients understand how an adviser’s services can help but also how subscription pricing initially might best meet their needs.

Decide what you will charge and for what services. Do market research so your prices are competitive. Some rates you may be unwilling or unable to match. That’s OK. Build ranges and flexibility into your pricing structure. Remember, your aim is to build a foundation with a new client. Provide a competitive entry point into your services where it makes sense for your client and you.

Focus on what you know best. Maybe you know futures and options better than most. Well, right now people on Robinhood would love to pay for your time so they can make smarter investments. Or maybe you are an expert on 1031 exchanges. Promote your expertise to the right audience, and you will build a book of business.

Find your niche. Work to understand your ideal client and gravitate toward that market with the expertise you bring. The medical industry and sports and entertainment are easy examples to point out, but they are difficult to break into. Review your existing portfolio and think about the type of clients with whom you really enjoy working. They might be small-business owners in the fintech industry or maybe agricultural clients who focus on organic produce. Whatever the sector is, focus on it, know it, and own it.

Embrace digital marketing. The subscription-based model particularly appeals to a younger clientele, who seek out information online in an effort to educate themselves. Advisers need a digital presence with content such as a website, blogs, and video seminars that provide information. Adding paid and earned media to their arsenal helps advisers connect with audiences of all ages, boosting visibility and bringing in new business.

The financial planning business is changing. Technology, of course, is playing a big role. The pandemic forced a profound re-evaluation among many people. The pursuit of financial security is becoming a great motivator. A subscription fee approach is a smart way for financial advisers to tap into that inspiration. Clients get the advice they seek at an appealing price, and advisers can grow their book and help diversify their income structure while using an approach that is engaging and ultimately builds stronger relationships


  1. Munk, Cheryl Winokur. 2021, May 2. “TikTok Is the Place To Go for Financial Advice If You’re a Young Adult.” Wall Street Journal. www.wsj.com/articles/tiktok-financial-advice-11619822409.
  2. Charles Schwab. 2021. “The Rise of the Investor Generation.” www.aboutschwab.com/generation-investor-study-2021.
  3. CFA Institute. 2021. “Earning Investors’ Trust How the Desire for Information, Innovation, and Influence Is Shaping Client Relationships.” https://trust.cfainstitute.org/wp-content/uploads/2020/05/CFAI_TrustReport2020_FINAL.pdf.
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