Small business owners and entrepreneurs may be better served with a subscription service, because not only are much of their assets invested in their businesses, but they also prefer the clarity that a flat fee provides and often require ongoing advice.

Many clients enjoy the predictability of the model, since a fixed amount comes out of their cash flow every month to cover the cost of planning services. Subscription-based services also seem to fit in with the evolution of the industry. Since the shift from commissions to AUM, financial planning has evolved to a more relationship-focused, advice-centric business that often has little to do with the products and strategies deployed within a portfolio—yet most clients are served with a revenue model based upon the assets they’ve accumulated.

Clients and advisors alike have come to recognize that an AUM fee has inherent conflicts of interest associated with it. An advisor charging AUM has little incentive to make recommendations to clients that might reduce their AUM, says Erik Goodge, president of Newburgh, Ind.-based uVest Advisory Group.

“What if I have a client that gets a $100,000 windfall from their rich uncle or something like that?” asks Goodge. “If they had a bunch of outstanding debt and that client comes to me as an AUM advisor, though I would have the same fiduciary obligations, a conflict would exist. I might want to say that they should just invest with me—because that is how I get paid—though it might be better for them to pay off their debt.”

Goodge’s minimum subscription fee comes to $125 per month, or $1,500 per year. He also offers hourly, project-based planning as well as an AUM-based investment management service. Since launching his subscription service earlier this year, almost all of his new clients have selected that fee model.

With flat-fee models, the costs of planning and other add-on services are no longer obscured by all-in-one AUM fees. Financial planning, which is often seen as advisors’ greatest value-add, is no longer being “given away” to clients as an add-on service, but becomes central to the relationships.

But not every flat-fee advisor is sold on the subscription model. Sheryl Garrett believes Middle America is better served with an hourly planning model, where an advisor sets hourly rates like an attorney or an accountant.

“If I went to an attorney, I might pay a flat fee for whatever work they’re doing for me,” says Garrett. “They might be putting together my estate planning documents for $2,000, or handling adoption paperwork for $400. I just pay for whatever services I need, and that makes a lot of sense.”

Garrett founded her Garrett Planning Network two decades ago to support advisors engaging with clients through the hourly model.

But Palaveev argues that the hourly model structures the advisor-client relationship along transactional lines rather than social ones. Transactional relationships can suffer from a deficit in trust. In a similar argument, some advisors complain that using an hourly model leads to clients watching the clock during meetings, or refusing to call their advisors at all when a need arises because they are conscious of the cost of the advisor’s time.