Pershing Gives Advisors New Tools To Get Serious On Pricing Hot

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"Pricing Strategies to Create Growth" definitely sounds like a good idea. Pershing has packed the book with tidbits and tips like "enforce a minimum fee."

 

In general, they're suggesting that advisors who provide value-added service can charge more. It's advice we hear a lot, but we hear it because it needs to be said. 

 

A lot of advisors out there undercharge in order to win accounts, only to find that those accounts are unprofitable and frustrating.

 

Pershing is also negative on pure asset-based approaches. As they say, 

 

"Asset-based pricing is the dominant pricing method applied by the vast majority of advisory firms. While this method has several advantages, it also poses significant limitations for firms delivering comprehensive wealth management services.  As the breadth of a firm's service offering increases, profitability per client is challenged under a pure asset-based pricing structure. Also, firm revenue is at risk in the event of a decline in the market or investment performance."

 

Again, account minimums and even fixed fee business models may help with this.

 

Pershing has also come out with a calculator for affiliates that lets them run various hypothetical pricing systems and see where they'd break even under different scenarios.

 

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