In this latest Adviser Hangout video, I talk to Chris Daems of Principal Financial Solution about his decision to move all the firm’s private clients to a monthly retainer fee, collected from their bank accounts! Yes, that’s right – he is moving away from percentage of AuM and product-based adviser charging!
I asked Chris why he is making such a ‘crazy’ decision, especially when there’s no regulatory impetus to do so and many people in the industry would consider AUM model a stronger business model. Chris explained that his inspiration came partly from his accountant, who operates a similar model and having gone through the transition with about a third of the firm’s clients, so far just one client had objected to collecting the retainer straight from their bank account.
Chris says he has no particular objection to the percentage of AuM fee model and the reason he’s doing this is to ‘separate the church from the state’ by completely eliminating products (and product providers!) from how the clients pay for the service the firm delivers.
What do you think? Has he got it wrong?