The AUM model is becoming a business worth little more than 20 basis points, Ron Carson told RIAs at Fidelity's Inside Track conference today in New York City.
Carson should know. The various entities that form his Carson Group of advisory and coaching businesses have about $10 billion in assets under management and another $15 billion in assets under advisement.
Yet most advisors derive the lion's share of their revenues from asset management fees, and people have already been saying for decades that the AUM model is commoditized. Fees are falling for a number of advisors and other providers.
But there are other services that clients will be willing to pay for.
Carson and two other advisors, Jeffrey Gitterman of Gitterman Wealth Management and Frank Corrado of Blue Blaze Financial Advisors, discussed different ways to take their financial planning services to the next level. The session was moderated by Matthew Chisholm, senior vice president of practice management and consulting at Fidelity.
It all starts with asking questions and listening, the three advisors told attendees. The two words, "silent" and "listen" are spelled with the same six letters, Gitterman observed.
Corrado, whose firm stresses a thorough immersion into financial life planning, forces clients to go through an extended process of identifying their financial goals. Blue Blaze Financial employs the EVOKE process (an acronym standing for Explore, Vision, Obstacles, Knowledge and Excecution) developed by life planning pioneer George Kinder.
The firm requires prospects serious about becoming clients to go through the process first, but 90 percent become clients. Clients are speaking 90 percent of the time.
"You have to get used to long pauses," Corrado said. That's when the real information about what clients truly want out of life starts to surface.
To measure how successful the process is working with clients, Corrado said some indexes developed by Mitch Anthony and Steve Sanduski have proved to be very useful.