Is AUM Pricing Being Replaced by a Subscription Model?

By Erika Malzberg July 6, 2016

Financial and insurance services are shifting away from an AUM model (Assets Under Management) towards a subscription model, in response to customers’ demands.

“Pricing financial services and advice based on the client’s total assets under management is an antiquated model that isn’t resonating with millennials, experts say.”

“Increasingly, some customers (especially the 35-and-under demographic) view the AUM pricing model as antiquated, arbitrary, and stale as three-day old bread. In particular, the idea of minimum asset management pricing levels really seems to chafe younger financial consumers, who, frankly, just weren’t raised that way in a digital culture.” This has led to some savvy financial planners shifting to a subscription model.

Says Benjamin S. Offit, a financial planner with Clear Path Advisory, in Pikesville, Md, “I help younger clients with a membership or subscription model that appeals to them, because they have access to my firm and our platform in a similar way they are used to with things like gym memberships. Clients are generally confused about advisor fees in the first place, and that confusion leads directly to frustration at their financial planner.” A subscription model can offer transparency and ease frustrations.

Read the full article AUM Pricing: A Dinosaur in Today’s Financial World? at: insurancenewsnet.com

Learn more about subscription models with our free guide The Basics of Subscriber Management.