How Financial Advisors Are Going The Monthly Retainer Route

By Juliette Fairley

Since launching his own financial advisory firm in October, Grayson Hofferber has charged a monthly retainer that ranges from $50 to $500 a month depending on the complexity of a person's financial circumstances.

In exchange for the money, each client receives a detailed financial plan that’s updated every six months.

“Monthly services include advising on budgeting, debt repayment, managing credit card rewards, analysis of the best mortgage products, investing for retirement and tax planning,” Hofferber said. “It is truly comprehensive.”

The 30-year-old relied on the XY Planning Network to help him transition to a monthly retainer revenue model.

Still others find guidance through their broker dealers and third-party vendors.

“Fidelity, Schwab and TD Ameritrade all have training program that relate to helping fee based advisors shift to a retainer or hourly based program because it’s consistent with the support they provide to fee based advisors launching registered investment advisories,” said Howard.

Founded by former WebEx and Salesforce executives, Zuora helps businesses move towards a subscription-based revenue business model with tools for billing, accounting and analytics.

“Zuora Connect helps ensure the order-to-cash process is interconnected across the enterprise and can rapidly plug into applications and systems without excessive spending on resources or developers,” said Mark Smith, CEO and Chief Research Officer at Ventana Research.

But like any revenue model, there are upsides and downsides to implementing a monthly retainer system.

“The upsides are monthly recurring revenue for income planning purposes, greater client trust and loyalty as well as ease and transparency of pricing,” Hofferber said. “The downsides are monthly invoicing, handling of more frequent payments and managing ever-changing client needs.”

Hofferber employs a bookkeeper to invoice his clients individually and monthly.

“From a competitive standpoint, this model is a differentiator in the marketplace, allowing clients who previously were not able to afford financial planning advice the access they need and desire,” he said.

Some 86 percent of Hofferber’s overall revenue is from monthly retainer clients of which eight are millennial-aged households.

“This revenue model attracts many Millennials, because so much of their spending is based on a subscription basis,” said Hofferber who is based in Denver.

Some 80 percent of customers are demanding alternatives to buying a product outright including subscribing, sharing, and leasing, according to a report by The Economist Intelligence Unit.

“Many of the services that Millennials depend on are recurring charges linked to a credit or debit card for everything from rideshare services, food delivery, clothes shopping and entertainment,” Hofferber said. “So, why not have your financial planning services work in the same way?”

Juliette Fairley is a business and finance journalist who has written four personal finance books and has written for major news organizations. Juliette can be reached at [email protected].

Juliette Fairley is a business and finance journalist who has written four personal finance books for John Wiley & Sons and has written for The New York Times, The Wall Street Journal, The Street and many other publications. She is a member of the American Society of Journalists and Authors, the New York Financial Writers Association and a graduate of Columbia University's Graduate School of Journalism. Juliette can be reached at [email protected].