Brad Arends, chief executive officer of intellicents clues us in on how his firm is dealing with this evergreen and ongoing problem.
In this interview from the Advisor Alliance conference in San Diego, John Sullivan of 401k Specialist speaks with Brad Ahrens about the pressing issue of fee compression in the financial advisory industry and how firms like his are navigating it.
Ahrens confirms that fee compression is a significant concern, pushing advisors to think more strategically about their service models. To adapt, intellicents has introduced a three-tier bidding system that allows them to deliver varying levels of service:
- Plan-level advisory as a base,
- Employee education as a mid-tier,
- Participant-level investment advice as a premium offering.
This tiered approach provides flexibility for clients and opens up multiple pricing models, helping advisors retain margins while meeting client expectations.
Another key strategy Ahrens discusses is the use of risk-based models in investment plans, often layered on top of existing target-date funds. These models serve two purposes: they enhance plan customization and create new value propositions that justify additional fees. While there’s a growing trend toward flat-fee models regardless of plan size, firms like intellicents are finding room to innovate—particularly by introducing customized target-date solutions that align better with specific client demographics and financial goals.
Client education emerges as a recurring theme. Ahrens stresses that demonstrating the performance benefits and enhanced decision-making support from these advanced strategies is vital for client buy-in. By aligning more closely with participant needs and preferences, advisors can create more resilient, value-driven service models.
The video sheds light on the proactive measures firms are taking to remain competitive in a cost-conscious industry, and underscores the increasing importance of flexible service offerings, innovation, and education in today’s financial advisory landscape.
