What Is Subscription-Based Financial Planning?
Key Takeaways:
Subscription-based financial planning transcends traditional AUM and offers clarity, trust, and a consistent revenue stream for advisors.
The subscription-based model is scalable and offers alignment with client needs; however, it requires careful communication, clear deliverables, and operational retooling.
Asset-Map helps financial advisors standardize onboarding and justify fees for a bigger impact.
Is the assets under management (AUM) model limiting who you can serve?
Financial advisors everywhere are asking this same question. In today’s world, more clients, especially younger, high-income professionals, are seeking ongoing financial advice without tying it to investable assets.
The AUM model doesn’t meet the needs of all client types and can turn potentially great clients away from your business. As the active generations shift, financial advisors and planners are constantly on the lookout for ways to attract clients from younger generations. One of the proposed solutions is to offer a subscription-based service model. But what is subscription-based financial planning, and how can you implement it?
In this article, we’ll cover why it can benefit financial planners as service providers, especially if you’re feeling iffy about your current pricing structure.
What Is Subscription-Based Financial Planning?
Subscription-based financial planning is a monthly or quarterly flat-fee model for providing ongoing financial advice to clients. This model of financial planning is not tied to invested assets like AUM, but instead focuses on concrete advice and financial plans.
It isn’t an hourly-based model where clients pay by the hour, but rather, clients pay a flat rate for monthly services. It also differs from commission-based models, and advisors don’t earn money from selling financial products to clients.
The modern era’s shift toward access, transparency, and relationship-based service lends itself to this type of financial planning. The subscription-based model is emerging as a popular option among Gen X, millennials, and early-stage accumulators.
Benefits of Subscription-Based Financial Planning
There are several key benefits associated with subscription-based financial planning, including:
Broader Accessibility
By using this model, financial advisors open the door to clients with different needs. Clients don’t need large portfolios to work with an advisor with this model. Subscription-based financial planning is accessible to anyone willing to pay for services.
Consistent Revenue Stream
Financial firms can rely on a consistent revenue stream when using this planning model. This is one of the primary reasons financial advisors consider implementing this model. A consistent revenue stream helps keep cash flowing and provides a level of financial security.
Clarity and Trust
Flat-fee pricing fosters trust among clients, as they know exactly what to expect in terms of monthly or quarterly charges for your services. With hourly, AUM, or commission-based models, the amount paid changes regularly.
Better Alignment
The subscription-based model offers greater alignment between an advisor’s time and a client’s needs. With this type of financial planning, you can deliver advice and support clients regardless of the size of their portfolio and the transactions they make.
Scalable Client Service
The subscription-based financial planning model offers scalability through standardized planning touchpoints. Advisors should build repeatable processes for onboarding, goal setting, and regular check-ins, making it easier to serve a growing number of clients without sacrificing quality.
Key Considerations Before You Launch
There are several considerations financial advisors should make before launching this modern financial planning model.
Who is This Model For?
The first consideration is defining who this specific planning model best serves. The subscription-based model is designed for early accumulators, business owners, and HENRYs (high earners, not rich yet). These are the types of clients who want holistic financial advice beyond investments. Additionally, niche or tech-savvy client segments may enjoy the subscription-based model.
Common Challenges
What are the challenges with this type of financial planning? Here are three challenges that are often seen with subscription-based financial planning.
1. Justifying ongoing fees
Some clients might struggle to buy into the subscription-based model because of the ongoing fees. Outlining clear deliverables that clients will receive each month/quarter is essential to helping clients understand the benefits of this model.
2. Requires more communication
Compared to the AUM-only model, a subscription-based model often requires more client communication. This can be a challenge time-wise for some advisors. Schedule regular meetings to share the monthly deliverables and offer open lines of communication.
3. Retooling may be necessary
Advisors may need operational or process retooling to scale efficiently. Financial planners should implement standardized workflows, adopt new technologies, and create templates for recurring deliverables to streamline services.
How to Structure Your Subscription Offering
Wondering how to actually go about launching a subscription-based financial planning model? We’ll outline the key steps to take for a successful launch.
Define your service tiers
Typically, in the subscription-based planning model, advisors offer multiple tiers of service. First, you must define what services each tier includes, such as planning meetings, check-ins, email support, asset tracking, etc.
It’s critical that you’re explicit about the frequency of meetings, the access clients gain, and the types of advice provided. Setting clear expectations ensures that clients know what they’re signing up for.
Set pricing
Next, you need to set your pricing for each tier. Subscription-based services work on a flat-fee basis, typically paid monthly or quarterly. You could consider doing an annual subscription discount to encourage long-term services.
Set your pricing tiers based on complexity or household needs to ensure clients have options. You can also consider bundling your services with family plans, add-on services, or specialized business owner tiers.
Systematize client onboarding and reviews
Standardizing your process helps keep service delivery consistent and scalable. By systematizing client onboarding and reviews, you can provide the same level of quality to each and every client.
Using visual planning tools, like Asset-Map, helps keep meetings efficient and the experience repeatable. Help clients understand your advice with beautiful visuals.
How Asset-Map Supports Subscription-Based Planning
Asset-Map is a revolutionary tool for financial planners. Advisors are constantly hunting for tools that save time, simplify complexity, and visually engage clients. With Asset-Map, you can standardize client intake and review conversations, quickly illustrate progress, gaps, and changes, and deliver a consistently high-value experience across service tiers.
Asset-Map’s visualization features promote deeper client conversations and help justify the subscription fee by keeping planning visible and actionable. Asset-Map also integrates into other popular financial planning tools like eMoney Advisor, Holistiplan, Moneyguide, Nitrogen, Orion, Black Diamond, and Morningstar.
Support your subscription-based planning services with Asset-Map’s easy-to-understand visualizations. Clients can easily see their entire financial picture to identify areas for improvement and track progress.
Build a Flexible, Scalable Practice
Subscription-based financial planning isn’t just a pricing model; it’s a mindset shift. Financial advisors interested in this model should focus on clarity, consistency, and communication. They can serve more people, grow more predictably, and drive client loyalty with subscription-based planning.
Explore how Asset-Map can aid in building a more flexible, scalable practice for every pricing model. Schedule a demo today.