It’s been little more than a month since fee-payment-processing platform AdvicePay closed its $2 million crowdfunded seed extension funding round and the company’s already announced its first enterprise client, Cetera Financial Group. The independent financial advisor network will be rolling out the fee-for-service offering in a single structured pilot program having access to both AdvicePay and Cetera’s practice management business consulting services. AdvicePay was founded by Michael Kitces and Alan Moore, founders of the XY Planning Network for financial planners.
As the number of Gen X and millennial clients serviced by advisors continues to grow, advisors have increasingly turned to pricing models that go beyond simple assets under management fees and commissions. Among RIAs, for example, some 47 percent of advisors say they’re changing their fee structure to appeal to new clients, including 33 percent who are offering a flat fee for financial planning or coaching, according to a 2018 TD Ameritrade Institutional survey.
When Cetera announced its partnership with AdvicePay, it also cited demand among “generations X and Y” for subscription-based advice, while noting its advisors were interested in growing their practices by “simplifying the transactional experience,” according to Adam Antoniades, president of Cetera. "Very small numbers of highly engaged advisors" will participate in the initial rollout, said Cetera spokesperson Adriana Senior.
Cetera's Advice-Centric Experience, which now includes the AdvicePay service, is a response to internal demand and trends in the industry, said Senior. With investors seeing offers of low and zero-fee ETFs, from companies like Vanguard, SoFi and Fidelity, pressure increases on financial advisors to move beyond investment management. “Over the last 40 years, the role of the financial advisor has greatly evolved, from being someone who could help pick the right stocks, to an asset manager, to a more-sophisticated holistic wealth manager,” she said. “It’s really about moving from a transactional relationship to a more holistic one between advisors and clients.”
In some cases, advisors will be able to charge for advice without a client even opening an investment account, according to the announcement. Cetera advisors using AdvicePay will be able to accept credit cards, debit cards, and automated clearing house (ACH) payments for their financial advice. The Cetera business consulting team will provide advisors with help on business models and appropriate fees, among other services.
Cetera did not indicate when the fee-for-service offering would move from pilot phase to full rollout, but noted it would be working closely with AdvicePay and made it clear the use of the tech would be tailored to its own advisors' needs.
The move is part of a recent wave of brokerage firms creating platforms for independent registered investment advisors to embrace fee-based advisory services. Commonwealth recently opened a business support channel for fee-only RIAs on its platform, and Wells Fargo recently debuted a business channel to support independent advisors.
