![Page 1: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/1.jpg)
![Page 2: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/2.jpg)
The evolution of adviser charging models in practiceDennis Hall – Yellowtail Financial PlanningAdam Young – Dragonfly Planning
![Page 3: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/3.jpg)
Objectives for the Business
To develop a valuable client centric proposition
To provide services that a client wants and needs at a commercially viable price
![Page 4: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/4.jpg)
Understanding your target market
Positioning your suite of services (and skills) around opportunities and threats that your target market are facing
Becoming the “go to” specialist in that sector/market
Building a trusted relationship and community to enhance your services
![Page 5: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/5.jpg)
The Solutions ......
Avoiding product noise.......
![Page 6: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/6.jpg)
Dragonfly Evolution
![Page 7: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/7.jpg)
Attributes for Success
VALUE
Source: JP Morgan
![Page 8: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/8.jpg)
Dragonfly’s Journey & Perspective
The world is changing, and we must adapt to survive
Working on a pure fee basis has removed perceived conflict of interest
Our primary operational model is based on flat fees renewed annually
![Page 9: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/9.jpg)
Yellowtail story – fees version 1.0Single (value based) fee - our wish list• Easy to understand• Rewarded us for advice on other assets• Removed any product biases• Alignment of interests• Attractive to long term client relationships• Sustainable • RDR ready• Market advantage• Removed from commission model
![Page 10: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/10.jpg)
Yellowtail story – fees version 1.0Single (value based) fee - results• Lasted less than a year• Existing clients initially accepted it• Prospective clients sceptical• Nobody liked it (including us)• Raised more questions than it answered• ‘Horse’ trading over value of other assets
![Page 11: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/11.jpg)
Yellowtail story – fees version 2.0Range of tiered fixed fees• Sign on fee• Negotiate from £5,000• Annual fees based on AUM• Broadly 0.5% or less• Focus on Financial Planning• Annual or more frequent reviews• Capped• Calculated on an underlying hourly rate
![Page 12: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/12.jpg)
Yellowtail story – fees version 2.0Range of tiered fixed fees – the results• Easier to explain• Too much negotiating on the initial fee• Too much emphasis on Financial Planning• Sold lots of financial plans• Didn’t build AUM quickly• Difficult cash-flow position• Trouble with value proposition during credit crunch• Doing more work than we were being paid for
![Page 13: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/13.jpg)
Yellowtail story – fees version 3.0Fixed, Hourly and Value Based Fees.• Financial Planning Fee 50% up front - 50% on completion• £2,500+VAT initial • Implementation fee based on hours spent (VAT exempt)• Value based fee 0.5% AUM (+VAT)• Introduced Satisfaction Guarantee• Created value proposition for financial planning• Sample menu of charges for implementation
![Page 14: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/14.jpg)
Yellowtail story – fees version 3.0Fixed, Hourly and Value Based fees – Results• Attracted financial planning work • A barrier to people wanting long term relationship• Better cash-flow but long time before AUM increased• Clients nervous about hourly fees• Happy to pay fees for each stage • Still not making decent profit
![Page 15: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/15.jpg)
Yellowtail story – fees version 4.0Fixed, Value and Value Based Fees • Kept the initial fee the same• Changed to value based fees for implementation• Increased the ongoing AUM from 0.5% to 1% on first £1m• 0.35% funds in excess of £1m• Additional project fees for planning
![Page 16: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/16.jpg)
Yellowtail story – fees version 4.0Fixed, Value and Value Based Fees – Results• Increased revenue – best ever half year results• Lost some clients who wanted cheap work• Appeals to our HNW clients• Better client engagement• Moved everybody across
![Page 17: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/17.jpg)
Yellowtail story – fees version 4.1Fixed, Value and Value Based Fees – next• Reduce the costs of entry• Speed up the pace of engagement• Refine the menu of additional services• Sell higher value planning
![Page 18: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/18.jpg)
Professional Partnering
![Page 19: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/19.jpg)
Freedom....
![Page 20: The evolution of adviser charging models in practice](https://reader036.vdocument.in/reader036/viewer/2022062520/56815b69550346895dc96062/html5/thumbnails/20.jpg)