Financial advisors are facing a tricky situation as they raise planning fees, especially when it comes to repricing existing clients. The industry is witnessing a surge in planning fees, with the average annual retainer fee among advisors who charge separately for financial planning services skyrocketing by 52% since 2023, reaching $6,815. This trend is particularly evident among registered investment advisors (RIAs), who are charging a premium of 44% more than non-RIAs. The study by Datos Insights highlights a fascinating paradox: while advisors are raising fees for new clients, they are maintaining legacy pricing for long-standing relationships, creating a two-tier client book that could become increasingly difficult to manage. This approach minimizes client friction but may lead to challenges as the gap between legacy and current pricing widens. The data also reveals that senior advisors are less likely to raise fees for all clients, with only 14% applying blanket increases, compared to 58% holding fees flat. This could be due to client accommodation in long-standing relationships or mature pricing, which means they face less pressure to adjust. Looking ahead, nearly one in five advisors plan to change their fee structure, with non-RIA advisors leading the way at 27%. The most commonly cited destination structures are annual retainer and AUM fees, with a desire for business growth or scaling driving this shift. As the industry evolves, advisors must carefully consider how to reprice existing clients while maintaining client relationships and adapting to market demands.
