Understanding the Core Retirement Income Planning Pricing Models

Selecting the optimal pricing model is a strategic decision that impacts everything from your revenue stability to how clients perceive the value of your services. For retirement income planning, three primary models dominate the landscape:

• Assets Under Management (AUM): Charging a percentage of the client’s investable assets you manage.
• Fixed Fee: Charging a set dollar amount for specific services, plans, or packages.
• Subscription (or Retainer): Charging a recurring fee (monthly or annual) for ongoing access to services, advice, and planning updates.

Each model has distinct characteristics, advantages, and disadvantages that make it more or less suitable depending on your business structure, target clientele, and the specific services you provide.

The Assets Under Management (AUM) Model

Historically prevalent in wealth management, the AUM model charges clients a percentage fee based on the value of the investment assets you manage for them. Common rates range from 0.50% to 1.50% or more, often decreasing as asset levels increase.

Pros:

• Scalability: As client assets grow, your revenue grows without necessarily increasing your workload proportionally.
• Alignment with Investment Growth: Clients may feel your incentives are aligned with helping their portfolios grow.
• Revenue Predictability (to a degree): Provides a relatively stable income stream based on total assets under management, although market volatility can impact it.

Cons:

• Perceived Conflict of Interest: Clients may question if recommendations are biased towards asset accumulation rather than comprehensive planning.
• Inequity for Non-Investment Assets: Doesn’t account for clients with complex financial lives but lower investable assets (e.g., high real estate, business equity, but limited portfolios).
• Difficulty for Accumulators: Can be cost-prohibitive for younger clients or those still accumulating assets, who may benefit most from early planning.
• Transparency Concerns: The fee amount can fluctuate significantly with market changes, making it harder for clients to budget or fully understand the total cost.

Suitability: Best suited for clients with significant investable assets who primarily seek ongoing investment management integrated with their retirement income plan.

The Fixed Fee Model

The Fixed Fee model involves charging a predetermined, flat dollar amount for specific services or deliverables. This could be a one-time fee for developing a comprehensive retirement income plan, a fee for a specific analysis (e.g., Social Security optimization), or a fee for a package of services.

Pros:

• Transparency & Predictability: Clients know the exact cost upfront, which can build trust and make budgeting easier.
• Value-Based Pricing Potential: Allows you to price based on the value delivered (peace of mind, optimized strategies) rather than just asset size or time spent.
• Access for All Asset Levels: Makes your services accessible to clients regardless of their investment portfolio size.
• Focus on Planning: Shifts the client conversation from investment returns to the broader value of the financial planning engagement.

Cons:

• Scope Creep: Careful scope definition is essential to avoid doing more work than the fee covers.
• Difficulty in Pricing: Requires a solid understanding of your costs, time investment, and the value perceived by the client to set profitable fees.
• Revenue Lumps: Income can be less predictable than AUM or subscription models, arriving in larger, less frequent sums.

Suitability: Excellent for project-based work (initial plan creation, specific analyses) and for packaging distinct service levels (e.g., a ‘Basic Retirement Snapshot’ vs. a ‘Comprehensive Income Strategy’). This model is powerful when moving towards packaging and productizing your services. Tools like PricingLink (https://pricinglink.com) are designed to help you present these distinct fixed-fee packages and optional add-ons clearly and interactively to clients.

The Subscription or Retainer Model

This model charges clients a recurring fee (typically monthly or annually) for ongoing access to your services. This isn’t just for investment management but for continuous financial planning, advice, check-ins, and plan updates as life circumstances and market conditions change.

Pros:

• Recurring Revenue: Provides predictable, stable income, smoothing out cash flow.
• Ongoing Relationship: Encourages continuous engagement and reinforces your role as a long-term advisor.
• Client Access: Clients feel more comfortable reaching out with questions throughout the year, leading to better outcomes and stronger relationships.
• Value over Time: Positions your service as an ongoing partnership, not just a one-time transaction.

Cons:

• Perceived Cost: Clients may see the recurring fee as a constant expense, even during periods of less intense activity.
• Defining ‘Ongoing Access’: Clear service level definitions are needed to manage client expectations about availability and included services.
• Requires Commitment: Works best with clients seeking a long-term planning relationship.

Suitability: Ideal for clients who need and value ongoing planning, advice, and adjustments throughout their retirement journey. It’s also effective for serving younger clients or accumulators who need planning guidance but don’t yet have significant assets for an AUM model.

Choosing the Right Model (or Combination) for Your Firm

Deciding which retirement income planning pricing models to use isn’t a one-size-fits-all decision. Many successful firms use a hybrid approach.

Consider these factors:

1. Your Target Client: Who do you serve best? Clients with high assets might fit AUM. Those needing project-based planning might prefer fixed fees. Clients wanting continuous support might opt for a subscription.
2. Your Service Offering: Are you primarily focused on investment management, comprehensive planning, or specific niches (e.g., executive compensation, small business owner exit planning)?
3. Your Business Goals: Do you prioritize scalable growth (AUM), predictable cash flow (Subscription), or project flexibility and value-based pricing (Fixed Fee)?
4. Perceived Value: How do clients best understand and appreciate the value you provide? Flat fees and subscriptions often make the cost of planning more explicit and disconnected from market performance.

Many firms find success by offering a combination: perhaps AUM for core investment management, a fixed fee for the initial comprehensive plan build, and a subscription for ongoing planning and review services separate from asset management fees (or as an alternative to AUM entirely).

Implementing and Presenting Your Pricing Models

Once you’ve defined your retirement income planning pricing models, how you communicate and present them is critical. Transparency builds trust.

• Calculate Your Costs: Before setting fixed fees or subscription rates, know your operating costs and the value of your time. Don’t guess.
• Define Service Tiers/Packages: Clearly outline what’s included in each fee structure or package. Use tiered pricing (e.g., Bronze, Silver, Gold service levels with increasing levels of access or service inclusions) to offer choice and make higher tiers seem more valuable (pricing psychology - anchoring).
• Communicate Value: Frame your fees around the outcomes and peace of mind you provide, not just the tasks you perform.
• Modern Presentation: Move beyond static PDFs or spreadsheets. An interactive pricing presentation allows clients to explore options, understand the value of add-ons (like advanced tax planning or estate coordination), and see the total investment clearly.

For firms looking to streamline this specific part of the process, PricingLink (https://pricinglink.com) offers a dedicated solution. It allows you to create interactive links where clients can select service packages, choose add-ons (e.g., ‘Add Social Security Optimization: +$500’), and see the total price update in real-time. This modern approach simplifies complex offerings, saves you time in the quoting process, and provides a professional client experience. While PricingLink is laser-focused on pricing presentation and lead capture (it doesn’t handle full proposals, e-signatures, invoicing, etc.), its ease of use and affordability make it a powerful tool specifically for enhancing the pricing conversation.

If you need an all-in-one solution for proposals, contracts, and invoicing, general business tools like HubSpot CRM (https://www.hubspot.com), Zoho CRM (https://www.zoho.com/crm/), or vertical-specific financial planning software often include proposal features. For comprehensive proposal software including e-signatures, you might look at tools like PandaDoc (https://www.pandadoc.com) or Proposify (https://www.proposify.com). However, if your primary goal is to modernize how clients interact with and select your pricing options, PricingLink’s dedicated focus offers a powerful and affordable solution starting at $19.99/mo.