A new registered investment advisory firm aims to help more financial planners use fee models that separate their professional craft and calling from investment and portfolio management.
Former Marine Corps sergeant Steven Fox secured the Securities and Exchange Commission's approval to register San Diego-based AdviceOnly last month as a service provider to financial advisors eschewing the industry's traditional fee of 1% of assets under management. That fee model, some argue, has fewer conflicts of interest and increases access to planning. In
Most wealth management compensation between advisors and a brokerage, RIA or another outside firm providing them with services revolves around the share of annual revenue flowing from client fees to each business in the equation. AdviceOnly and some other firms instead ask advisors for a flat fee in exchange for services. In doing so, they practice the same approach in asking each other for a set fee regardless of AUM that they carry out in asking clients for one.
The advisors will technically be 1099 independent contractor employees of AdviceOnly, but they could use their own brands or operate under the RIA's name. The firm has lined up industry collaborations for incoming planners, like the "Emerald" membership level in the XY Planning Network and exclusive discounts from other outside firms.
For the yearly fee, the advisors also get compliance coverage, errors and omission insurance, technology and administrative support and a continuity plan, as well as a profile in the "Find an Advisor" section of
"I have no idea how many people are going to be joining this thing in the first year or two," he said. "It doesn't have to be huge. I'm hoping that other people copy us. I see that as a win, too."
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The murky fee landscape
Fox's firm is adding
Fee models remain a
"AdviceOnly operates just like our members do — with transparency first," Fox said in the LinkedIn post revealing the official launch of the firm. "Members pay a simple, flat $18K annual fee and keep 100% of the revenue they earn. No grid rates. No commission clawbacks. No salary negotiations. No nonsense. A growing number of clients are demanding competent and ethical professional financial advice that isn't tied to product sales or investment management and the blatant conflicts of interest that come with them. Our financial planning profession/industry has collectively failed to meet that call."
Regardless of those fraught arguments, most RIAs are using a combination of fees these days. Over 85% of SEC-registered RIAs that provide planning services took in a fixed or hourly fee in 2023,
"While this is a small group of firms, they account for almost one-quarter of the industry's non-asset management clients and nearly one-fifth of the industry's clients overall," the report stated. "Of the firms that don't charge an asset-based fee, over half charge a fixed fee or a subscription fee. Some of the largest digital advice platforms charge fixed or subscription fees, but not asset-based fees."
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Pitching planners who don't want to run an RIA
The opening of AdviceOnly attracted some notice in an industry that is always discussing the level and type of fees used in the business. Besides being a certified financial planner and an enrolled agent, Fox completed advisory team consulting firm The Ensemble Practice's two-year professional development program, the
"We admire the drive to improve and create, and we wish Steven and his new business success and prosperity," McGinness said in an email. "We are glad to see the entrepreneurial spirit of the independence movement preserved and flourishing and we are proud that the G2 Leadership Institute brings entrepreneurs like Steve together. Financial advice and planning reaching more people at better quality is an amazing goal, and we have no doubt that this new business contributes to that aspiration."
Fox is still the part owner of a tax preparation business, Next Gen Tax Prep, where he spends about 10% of his time during business hours, according to AdviceOnly's initial
"As an advice-only financial planner who does not offer investment management services, we do not have a concern over which broker-dealers a client may choose in order to implement our investment recommendations," the document stated. "AO does not select or recommend broker-dealers for client transactions."
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Public and advisor benefits
Like some predecessors with services for fee-only planners such as XYPN and the Garrett Planning Network, AdviceOnly is seeking to aid them in operating as an RIA without necessarily needing to open their own advisory firm and take on all of those responsibilities. Investment management or product sales of any type "automatically explode the operational complexity and the costs" involved with running an RIA, even though advisors can simply recommend that their clients take specific steps without being the ones to implement them, Fox said.
"We don't have to be the ones who actually execute," he said. "It's just separating investment management from financial advice, which is what a lot of consumers want in the first place."
In another contrast with many RIAs and wealth management firms, AdviceOnly will operate as a public benefit corporation that is legally obligated to advance some advantage to the public beyond the interests of their shareholders. Since first considering the idea three or four years ago, Fox has been trying to figure out how to provide a solution for advisors who want to "broaden access to financial planning services" and "work with an underserved market" without absorbing the costs and duties involved with running their own RIAs, he said.
"It's not just a benevolent thing we're doing for charity. There's a strong business case as well," Fox said. "It's not only actual conflicts of interest that matter, but also even a perception of a conflict of interest can have tangible negative consequences."
