Assets Under Management is a tried and true method of pricing in the fee-only model. Some say it is becoming obsolete, others claim it is here to stay, what do you think?


We’ve discussed hourly and retainer and subscription. today I want to talk a little bit about AUM, asset under management. AUM is like a comfy old slipper. It may not be the best slipper for you, but gosh you know it, it’s pretty comfy, that’s how AUM is. Clients get it. 1%. It's so simple. They understand what they're paying and it sounds kind of small. Renewals are not issues, clients just keep on paying you 1%, which is fantastic. And the tax write-offs are tried-and-true. If you're planning business is heavily focused on investments, AUM may be the perfect pricing model for you.  Where I find my comprehensive planner clients become a little disenchanted with AUM is the emphasis that it places on investment performance when you do so much more for your client.

There's also that last smidgen of conflict of interest with AUM. Suppose your client gets a large windfall but they've got that mortgage that could choke a horse. They come to you. If they pay down the mortgage, you get nothing. If they invest, that’s money in your pocket. I get that you’re ethical, good people, but some of my clients don’t even want that whisper of conflict. I know again, more food for thought than actual answers. Next time, we’re going to talk about how you can blend these together and create an engagement package that brings all these things to the table. So get your creativity going and we’re gonna work on creating the business that you dream of.