Eric H. Roberge is a young financial planner and investment advisor representative who wants to work with other young people, but the first investment firms he worked for told him young clients were not profitable.
Like many advisors, he ended up working with older clients who had large portfolios, charging fees based on assets under management. But the desire to help younger clients stuck with him.
In 2013, he launched Beyond Your Hammock in Salem, Mass., to do just that.
One of the ways he hopes to appeal to these clients is to offer them a different fee structure, since younger clients have good earning potential and little savings when they are starting out. Roberge, who is 35, charges an initial fee of $799 and then charges a $125-per-month subscription fee for ongoing financial planning services.
More advisors are starting to charge on an hourly, monthly or subscription basis to attract younger clients and to help them compete with inexpensive robo-advisors.
“I had not seen this type of fee structure before, but I found others who were considering it, and four of us set up a network of advisors to support each other,” Roberge says. “We talk once a week about any issues we are having. All four of us have been successful connecting with young clients.”
The clients, he says, appreciate the fee structure because they do not have to pay several thousand dollars up front and they can receive financial advice even though they do not have large portfolios to manage.
The fee structure takes the emphasis off such things as money management and estate planning, he says, and puts it on day-to-day financial activity, which is sometimes overlooked by planners since they are not being paid for it.
Roberge could take on a young doctor with $350,000 in education debts, for example, and help him or her pay down the debts and start to build savings. Or he can take on a young family that has earnings potential and is saving for a new house.
Roberge isn’t the only one. Other advisors are also looking at different fee structures.