Subscription financial planning has received a fair amount of attention recently, and for good reason. It provides a large, underserved segment of the population with access to sophisticated financial advice.

This compensation model is also now widely used as a tool for building potential future client pipelines. Instead of waiting until prospects have accumulated a sufficient level of wealth, advisors offer prospects financial planning for a onetime fee and an ongoing quarterly fixed fee. Wealth managers use these services to build relationships with younger individuals in the hope that they ultimately bloom into full-service, higher paying clients over time.

That said, like every other new thing that comes along in this profession, the subscription planning model has been a wee bit overhyped. A handful of prognosticators have even gone so far as to suggest that it will ultimately replace the fee-for-AUM model that currently dominates the industry.

These individuals correctly point out that AUM-based fees have almost no correlation with the value provided by wealth managers. Moreover, as the financial markets generated spectacular returns from 2012 to 2021, by one estimate about half of all industry participants devolved effectively into investment-only wealth managers. And absent another similar raging decade-long bull market, clients are most certainly going to start wondering why they are paying 0.75% to 1% of their assets each year for what these critics would argue is solely asset allocation advice.

That said, for two reasons there is zero chance that the industry is going to shift away from the AUM-fee compensation model anytime soon. First, the true value provided by wealth managers is not financial advice. Rather, it is helping clients manage the extremely complicated relationship that everyone has with their money.

More specifically, money is only a means to an end. And it is a wealth manager’s job to help clients diagnose their problems and goals and then organize and plan their finances to solve and achieve them. Accomplishing this involves helping them navigate a maze of often very emotional decisions, and this helps the advisor build deeper relationships with them. Indeed, virtually every wealth manager at some point has been told something by clients that they would not share with their spouses.

But it is also very hard to put a price on this value. It’s impractical at best trying to come up with some sort of flat-fee arrangement for things mostly intangible and for which the work involved varies greatly for different clients.

Second, the AUM fee model is not going anywhere because wealth managers recognize that they would be insane to abandon it. After all, this approach to getting compensated is just another type of subscription model—since it automatically renews unless the client elects to opt out. However, it is also the greatest subscription model ever because of how its fees increase over time.

More specifically, because client portfolios typically include large equity allocations, AUM-based fees are closely tied to equity market returns and they have historically increased at a rate that is much, much higher than inflation. Advisory fees also automatically increase as clients save and invest more, even though only de minimis additional work is required. In other words, this compensation structure pays wealth managers a lot more money while not—at least for now—forcing them to provide much more incremental value.

Advisors have been able to get away with all of this because the resulting fees are largely invisible to clients. The model doesn’t force the clients to write a check each quarter; instead, advisory fees are automatically deducted from their accounts and only later show up on their statements. Just imagine how different and difficult things would be for wealth managers if clients had to decide every quarter whether they wanted to pay another $5,000 or $10,000 for financial advice, especially after a market downturn.

To be sure, notwithstanding the emotional connection many often have with their advisors, at some point clients are going to start to wonder why they are paying so much, especially if investment returns revert to their historical averages. That said, rather than reduce fees or shift away from the AUM model, wealth managers instead are going to go up the value curve, providing additional services. Indeed, competitive forces alone will soon force everyone to do so.

More specifically, a small number of large industry participants have decided to capitalize on their scale and now offer to do a lot more for clients for the same fees that they currently pay. They provide a broader array of services that varies between firms but can include bill pay and receivables management, help with a client’s personal cybersecurity or even the drafting of estate documents—all of which are “fully integrated with your financial plan.”

Far more important, these firms are also expanding from just helping clients manage their wealth to also playing a role in helping them create it. Such services include helping business owner clients run better, more profitable companies and more fully monetizing that value. These firms are also helping certain clients plan their careers and maximize their earning power.

Their websites show that these more aggressive competitors now even offer business service technology as well as payroll services. Granted, not all these services are included without additional charge. But they are offered at attractive prices and are delivered in a manner that simplifies client lives.

Undoubtedly, many industry participants will find it disconcerting that they have to do a lot more for the same dollars. Most make a nice living without having to work too hard and want nothing to change. Moreover, for decades wealth managers have largely competed on the quality of their advice, as well as their sophistication and empathy, not on the scope of their services based on cost.

In any other industry, such changes would be considered unremarkable. It is how big companies regularly squeeze their smaller competitors. The only thing that is really surprising is how long it has taken these attitudes to take root in the wealth management industry. Soon every participant will have to find ways to do more for the same fees.

What other choice do they have? The alternative is that they wait for their clients to discover that their friends are getting a much better deal from another financial advisor. And nothing would be more corrosive to a trusted relationship than for a client to discover that their advisor had been grossly overpricing services.

The advocates of the flat-fee subscription compensation model are right in at least one aspect. Clients want, deserve and will soon get a better deal. However, it will not be driven by a shift away from the AUM-fee model. Rather, to preserve what can only be described as a fabulous way of getting paid for providing advice, industry participants will jump up the value curve and aim to make a bigger difference in their clients’ lives.

Mark P. Hurley is the CEO of Digital Privacy & Protection (