When financial advisors visit our office to get a feel for what we offer, a common question we get from them is “what’s the catch”? That question stems from their perception that our platform, which is inexpensive relative to most, offers so many value-add services for such little cost. The truth is, there is no catch. Honestly, we should probably charge more for our services. But we make enough to run and grow the business, while at the same time putting more money into our financial professionals’ pockets so they can in turn grow theirs, which benefits everyone. So what do advisors get from us and at what cost? Let’s take a look.
Advisors registered with a broker-dealer and registered investment adviser will typically pay a percentage of their revenue to the firm for basic support. This includes compliance, compensation processing, and other basic operational back office functions. Depending on the firm, the percentage of revenue the advisor gets to keep ranges from 30% all the way up to 95% or higher. In the independent advisor world, where IFP operates, advisors typically get to keep 75% to 95% of their revenue. IFP is on the more generous side of that scale, offering payouts of up to 96% of an advisor’s revenue.
Firms like IFP typically have some combination of fixed annual fees for things like technology and compliance. These fees can be numerous and vague and can add up easily without an advisor knowing. At IFP, we charge one simple monthly membership fee of $500, which goes toward the technology and compliance support we provide. The only other fees our advisors pay are annual registration fees and errors & omissions insurance (“E&O”), which any advisor at any firm must pay. All in, our annual fees are consistently less than our competitors, and they’re simpler to understand.
Most advisor firms offer some sort of advisory platform, on which an advisor can manage client assets for a fee. Most firms also charge some sort of platform fee to the advisor just for being able to use it. That fee can range from an additional 5% to 25% (and sometimes more) of the advisor’s assets, on top of the revenue they’re already taking from the fees charged. At IFP, we don’t charge an advisory platform fee simply to use our platform. If an advisor is using our platform, that means he or she is placing assets with us, meaning we’re going to receive a piece of the fees charged to those assets. We don’t need to make more revenue on top of that, hence the absence of platform fees; this is a significant advantage over other firms.
A La Carte Offerings
IFP offers several a la carte services, which we charge for, but none of which are mandatory for advisors to use. Some of these services include an in-house asset management team, a client services team that charges hourly for virtual administrative support, an insurance agency for advisors doing fixed insurance business, and a design team providing branding services and website design. What’s great about these offerings besides the value they bring to our advisors is that the prices we charge for them are all below market. We make a profit on them, but we also believe our advisors should benefit from preferred pricing since they’re affiliated with us.
Beyond our basic support, our competitive pricing, and our a la carte offerings, what many advisors also like about IFP is our growth mindset. And by growth we mean the growth of our advisors and their businesses. We recently launched a “How to Grow” series led by our Chief Business Development Officer, Jeff Acheson. The goal here is to provide simple tools to advisors at various stages in their careers that will allow them to grow from one revenue level to another. Later this year, we will be integrating this series into a proprietary coaching program wherein IFP advisors will have access to IFP coaches focused solely on getting them to the next level, whatever that means for them. Along with this coaching program, we’ll also be rolling out a reporting and analytics framework powered by Truelytics, with which our advisors will be able to measure the value of their practice and how it grows as they implement the tools we’re providing.
In summary, IFP’s mindset is different than other firms. We can operate a profitable firm while still offering competitive economics and high-quality services. By putting more of our profit back into the business and back into our advisors’ pockets, we invest in our primary stakeholder, the advisor, who is the reason our business exists in the first place. It’s really pretty simple, and there really is no catch.