Affluent investors prefer 'fee-based' planning — but do they understand it?
Affluent clients getting comfortable moving away from AUM fees
From his experience over the past year, Derrick Alexander, owner and lead financial advisor at
"I've recently engaged with three prospective clients with over $3 million in investable assets, and interestingly, all of them have shown a strong preference to start with a fee-based planning model, rather than jumping straight into a traditional AUM relationship," he said. "What I've found is that many of these individuals have successfully managed their own portfolios throughout their working years. They've done well on their own, and for most of their lives, they didn't feel a pressing need for an advisor."
Rather than diving headfirst into a full-service AUM model, Alexander said these clients are more comfortable "dipping their toes in the water" by engaging in project-based or hourly planning.
"This allows them to get to know the advisor, build trust, and see value before committing to a deeper, ongoing relationship," he said. "In several cases, they've even stated they'd be open to an AUM-based relationship in the future — but only once they've had time to build a real advisory partnership, not just a transactional relationship. These clients don't want someone to take over; they want a thought partner — someone who respects their past success but helps guide them through this next phase with clarity and confidence."
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