Why Move Beyond AUM and Hourly Billing?

For decades, Assets Under Management (AUM) has been the dominant pricing model in wealth management. While simple to understand, it often fails to reflect the full spectrum of services provided, particularly the non-investment-related holistic advice. Clients with significant non-portfolio assets or complex planning needs might feel overcharged, while firms providing extensive planning without large investable assets feel undervalued.

Hourly billing, common for financial planning-only firms, directly ties your revenue to time spent. This model can penalize efficiency, is difficult for clients to budget, and doesn’t scale well. It fundamentally commoditizes your expertise to hours on a clock rather than the outcome or peace of mind you deliver.

Adopting value based pricing wealth management allows your fee structure to evolve beyond these limitations, focusing instead on the overall benefit and results clients receive from your comprehensive services.

Defining “Value” in Holistic Wealth Management

Value in this context is more than just investment returns. It encompasses the tangible and intangible benefits clients gain. These include:

• Financial Clarity & Confidence: Providing a clear roadmap and reducing anxiety.
• Goal Achievement: Helping clients reach specific life goals (retirement, college funding, legacy).
• Tax Optimization: Implementing strategies that save clients significant money over time.
• Risk Management: Ensuring appropriate protection across insurance, estate planning, etc.
• Behavioral Coaching: Guiding clients through market volatility and preventing emotional decisions.
• Time Savings: Handling complex financial tasks so clients don’t have to.
• Coordination: Acting as a central point for their legal, tax, and other professional advisors.
• Peace of Mind: The ultimate benefit of knowing their financial life is well-managed.

Understanding and articulating these points is crucial for successful value based pricing wealth management. Value is subjective and perceived by the client, so your discovery process must uncover their definition of value and their most pressing problems.

Steps to Implement Value-Based Pricing

Transitioning requires careful planning and execution:

1. Deep Client Discovery: Invest time in understanding each client’s full financial picture, goals, fears, and what they truly value. This goes beyond assets and income; it’s about their life.
2. Define Your Service Packages: Structure your services into distinct packages or tiers based on the level of complexity and the scope of services delivered, rather than just AUM or hours.
3. Estimate Value Delivered: Quantify (where possible) the financial impact (e.g., potential tax savings, reduced debt interest) and articulate the qualitative benefits (peace of mind, clarity) each package provides.
4. Set Price Points: Determine price points for each package that reflect the perceived value to the client, your costs, and your desired profit margin. These prices should feel appropriate relative to the benefits.
5. Develop a Pricing Presentation Strategy: Plan how you will present these options to clients clearly and compellingly. This is where a modern tool can be invaluable (more on this below).
6. Train Your Team: Ensure everyone in your firm understands the new pricing model and how to articulate the value proposition.

Structuring Value-Based Service Packages

Instead of a single AUM percentage or hourly rate, consider offering tiered packages. This allows clients to choose the level of service and complexity that matches their needs and budget, while clearly defining what’s included.

Examples of potential package structures might be based on client complexity, net worth (excluding investable assets), or the specific planning modules included:

• Essentials Package: Core financial planning, basic investment oversight, annual review.
• Comprehensive Package: All Essentials features plus advanced tax planning integration, estate planning coordination, detailed risk analysis, semi-annual reviews.
• Signature Package: All Comprehensive features plus complex business owner planning, philanthropic planning, multi-generational wealth strategies, quarterly reviews, priority access.

Each package should have a clear, fixed price (e.g., $5,000/year, $15,000/year, $30,000+/year). You might also offer add-on services for specific needs (e.g., one-time project fees for complex M&A consulting or detailed cross-border planning).

Presenting these options in a clear, interactive format is key to client understanding and acceptance. Static PDFs or spreadsheets can be clunky. A tool like PricingLink (https://pricinglink.com) is designed precisely for this—allowing you to create shareable links where clients can see different packages, understand what’s included, select add-ons, and see the total price update live. This modernizes the pricing conversation and saves you time.

Communicating Value and Pricing to Clients

Successfully implementing value based pricing wealth management hinges on your ability to communicate the value before the price.

1. Focus on Outcomes: Frame your services around the results and benefits the client will experience, not just the tasks you perform. Use the insights from your deep discovery.
2. Educate the Client: Explain why your pricing is structured the way it is, emphasizing that it reflects the comprehensive value and peace of mind you provide, independent of market fluctuations or time spent on routine tasks.
3. Be Transparent: Clearly list what is included in each package and any optional add-ons. Ambiguity erodes trust.
4. Use Visual Aids: Presenting options side-by-side (like good-better-best) helps clients see the value progression. Interactive tools are excellent for this.

When presenting pricing, whether in-person or via a link, ensure the client understands the scope and the impact of your work. Tools focused solely on interactive pricing presentation, like PricingLink (https://pricinglink.com), excel at making complex package options clear and selectable for the client. For firms needing full CRM, proposal generation with e-signatures, or project management integrated, more comprehensive platforms like Wealthbox (https://www.wealthbox.com), Redtail (https://www.redtailtechnology.com/), or specific proposal software like PandaDoc (https://www.pandadoc.com) or Proposify (https://www.proposify.com) might be better fits. However, if your main challenge is providing a modern, interactive, and clear pricing selection experience specifically, PricingLink offers a specialized, affordable solution.

Challenges and Considerations

Switching to value based pricing wealth management isn’t without challenges:

• Client Adoption: Some long-standing clients may be resistant to changing fee structures. Communication and demonstrating the increased value are key.
• Defining Scope: Clearly defining what’s included in each package is crucial to avoid scope creep.
• Valuing Intangibles: Quantifying peace of mind or time saved is difficult but essential for articulating value.
• Pricing Psychology: Consider using pricing psychology principles like anchoring (presenting a higher-tier option first) or framing (highlighting the long-term value vs. the annual cost) when presenting options.

Successfully navigating these requires a commitment to clear communication and a client-centric approach.