Is becoming a fee-based advisor your next step?Article added by Steve Lewit on April 24, 2013

Steve Lewit

Buffalo Grove, IL

Joined: February 27, 2008

My Company

United Advisors

We all enter this business as neophytes. We then embark on a journey in which our work effort, experiences and interests cause us to grow and mature until we reach a certain level of comfort with what we are doing, who we are doing it with, and the results we are getting. At that point, most financial professionals relax into a general pattern of business which changes very little over time until, of course, something happens to rock the boat and causes them to consider a change. If you are one of those people that are searching for a next step, I would suggest you consider the fee-based model.

Taking the step into fee-based advisory requires a good deal of understanding, a healthy measure of courage and a high degree of belief in yourself — understanding just how to deliver the fee-based program to clients; courage to believe that you will not lose, but gain, clients by charging fees; believing that you deserve the fee that your clients will pay.

If you have those three ingredients — understanding, courage and belief — your next step will take you to a paramount level of this business which will deliver more revenue, self-esteem and quality of life than you have ever thought possible.

I want you to step back for a moment and consider this: There will come a time, I believe it will be relatively soon, when everyone in our industry will be required, for compliance reasons, to have a securities license in order to compliantly move funds from securities or mutual funds to annuities or life insurance products. That time is coming!

If you are ahead of the curve, you are already an RIA or IAR; if not, you may
be considering it. If you don’t fit into either of these categories, I submit to you that you are just a step away from huge compliance and legal issues, or you are well on the road to leaving our business sometime in the future.

Let’s look at each consideration separately:

Understanding — From a compliance perspective, and from your client’s perspective, you are giving the best possible unbiased advice. This means that you need to offer the full range of asset categories — both insurance- and market-based, and treat each asset respectfully, recognizing that there are situations which may demand the use of any and all of those assets classes.

This is the perspective for those of us who have adopted a true fiduciary standard in our businesses by securing, most commonly, either an RIA Series 65 or CFP designation. These designations mandate a true, client-first approach, which means that you have no agenda other than to provide the singularly best solutions for the client — no matter your personal preferences, commissions, etc.
Clients, when made aware of the difference between a suitability level of responsibility as compared to a fiduciary level of responsibility, flock to the fiduciary. It’s that simple: Fiduciaries are like magnets. You need to understand this.

Courage — The common thought that you will lose clients if you charge a planning fee while still earning commissions or management fees has no basis in reality. Our industry is full of circulating ideas about all kinds of industry “truths” that are not true at all. This is one of them.

The fact is that all levels of clients, even those just getting by, will pay for good advice as long as they feel they are really getting good advice. For example, advice which is truly unbiased and well-thought-out. If you ask your clients if they would prefer to pay for good advice, or get free advice from someone who has their own agenda, they will choose to pay the fee as long as it is reasonable and the advice is good.

Logically, most financial professionals come to the conclusion that charging a fee will chase clients away, especially lower wealth clients. In reality, however, this is not the case. We find that all levels of clients will pay reasonable fees if there is value behind the fee. Moreover, we find that wealthier clients expect to pay a fee and those are actually the clients you lose if you don’t charge one.

In talking with one of my wealthy clients, he said to me, “Fees? I don’t mind. I expect to pay a fee. Think about it, how much is a good idea worth? Certainly $1,000 or $2,000 dollars!”

To go against your logic requires the courage to believe in the experience of others and that their experience will also work for you.


If you are a product-oriented person, your knowledge has little value other than to get your customer to purchase the product from which you will make a commission or fee of some kind. The idea of charging your clients for knowledge is foreign to you because it is not tangible like a product.
Yet, your knowledge is like a good bottle of wine; the longer it has been on the shelf, the better it is. Perhaps you’ve been in this business 10 years — think of the experience and knowledge that you have to share with your clients. You have seen so much that can help them, so many situations, good and bad. You can sniff out problems on the journey and give better alternatives. What is that worth? Just the knowledge you have gained? Certainly, it's worth more than nothing.

Nevertheless, most advisors choose not to charge for their knowledge. Why? They don’t believe in its value as knowledge, only in its value to get someone to buy a product. The question is, why can’t you do both — get paid for knowledge and get paid for product? The answer: Only you are getting in the way of that happening because you don’t believe in what you have to offer.

When you stop selling and truly start advising, you will believe in yourself in a different way. You will believe in yourself as a deliverer of knowledge, rather than a top salesperson. Yes, you will sell more, but you will never think of yourself as a sales professional.


Today’s consumers are savvier than ever. They are demanding a different type of “selling” model — they want to be involved. Moreover, competition is keener than ever. Ask yourself this: “If you keep doing what you’re doing, what are the prospects for true success?” If you’re not sure of the future, then I would suggest you are already behind the eight ball.

If you have the understanding, courage and belief to move ahead, don’t walk, run to becoming a fee based advisor.
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