Advisors offering subscription-based services may also enjoy greater stability of revenue and income and the ability to more strategically plan for their business. “The subscription model business tends to be more stable,” says Kitces. “There are more opportunities to reinvest in staff and services. It’s scary to hire staff under the hourly model when you wake up on January 1 and your income is zero. In the subscription model, you wake up and have enough to pay an office staff member to deliver great planning to your clients.”
Yet most devotees of the subscription model do not hold their fee structure out as absolutely better than the others, and many are open to tiering, blending or otherwise combining different fee structures.
Ryan Firth, founder of Bellaire, Texas-based Mercer Street Co., came up with his $250 subscription fee by calculating the minimum income of his ideal client, $150,000, so that his clients would not pay more than 2% of their income each year. Because subscriptions focus the relationship on financial planning, most adoptees have warmed to it more than other options, says Firth.
“So far, it seems like a lot of our clients see value in an ongoing relationship,” he says. “That’s the most popular offering, and it’s how I would prefer to work with clients as opposed to a transactional hourly or work project.”