Enumerating the value of financial advice in a competitive market

a dual structure approach and analysis

Authors

  • Steve P. Fraser Lutgert College of Business, Florida Gulf Coast University
  • Brian C. Payne College of Business Administration, University of Nebraska at Omaha
  • Scott Schatzle Mutual Trust Advisory Group

DOI:

https://doi.org/10.61190/fsr.v29i3.3458

Keywords:

Advisory fees, Financial planning

Abstract

This paper introduces and examines a composite, dual fee structure (CDFS) for financial planners that helps quantify the value of financial advice. Our structure specifically separates financial plan- ning (advice) fees based on total net worth (NW) from Investment Management (IM) fees based on assets under management (AUM), which are readily observable and pervasive in the marketplace. Doing so facilitates quantifying the value of this financial advice in a competitive market setting. Knowing the financial value of the non-IM component of financial planning services can reduce per- ceived conflicts of interest by permitting financial planners to generate compensation for non-IM planning activities in a transparent manner, whether or not the client moves investable funds to the planner.

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Published

2021-09-30

How to Cite

Fraser, S. P., Payne, B. C., & Schatzle, S. (2021). Enumerating the value of financial advice in a competitive market: a dual structure approach and analysis. Financial Services Review, 29(3), 227–245. https://doi.org/10.61190/fsr.v29i3.3458

Issue

Vol. 29 No. 3 (2021): Fall 2021

Section

New Original Submission

License

Copyright (c) 2021 Academy of Financial Services

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