Enumerating the Value of Financial Advice in a Competitive Market – A Dual Structure Approach & Analysis

31 Pages Posted: 13 Nov 2020 Last revised: 9 Dec 2020

See all articles by Steve P. Fraser

Steve P. Fraser

Florida Gulf Coast University

Brian C. Payne

US Air Force Academy; University of Nebraska at Lincoln - Department of Finance

Scott Schatzle

affiliation not provided to SSRN

Date Written: 2020

Abstract

This paper introduces and examines a composite, dual fee structure (CDFS) for financial planners that helps quantify the value of financial advice. Our structure specifically separates financial planning (advice) fees based on total net worth (NW) from Investment Management (IM) fees based on assets under management (AUM), which are readily observable and pervasive in the marketplace. Doing so facilitates quantifying the value of this financial advice in a competitive market setting. Knowing the financial value of the non-IM component of financial planning services can reduce perceived conflicts of interest by permitting financial planners to generate compensation for non-IM planning activities in a transparent manner, whether or not the client moves investable funds to the planner.

Keywords: financial planning, advisory fees

JEL Classification: G29

Suggested Citation

Fraser, Steve P. and Payne, Brian C. and Schatzle, Scott, Enumerating the Value of Financial Advice in a Competitive Market – A Dual Structure Approach & Analysis (2020). Available at SSRN: https://ssrn.com/abstract=3699699 or http://dx.doi.org/10.2139/ssrn.3699699

Steve P. Fraser (Contact Author)

Florida Gulf Coast University ( email )

10485 FGCU Blvd S
Ft. Myers, FL 33965-6565
United States

Brian C. Payne

US Air Force Academy ( email )

Colorado Springs, CO
United States

University of Nebraska at Lincoln - Department of Finance ( email )

Lincoln, NE 68588-0490
United States

Scott Schatzle

affiliation not provided to SSRN

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