Bruce Risler, CFP®, CLU®, ChFC®, REBC®, President of Risler Financial Management in Plymouth Meeting, PA, shares his perspective on the continued growth of fee-based platforms. With more than 20 years of investment experience, Mr. Risler and his team manage a retail wealth management business that serves the needs of clients who are looking to build wealth through comprehensive financial planning.

Guiding Clients Toward Goals

Our mission centers on competently and ethically guiding our clients toward their financial goals, so they can focus on the more meaningful aspects of their lives. We say: It's not about the money; it's what the money is about.

In building portfolios for our clients, the fee-based model is the centerpiece or what we call the core. I am a huge proponent of the fee-based structure because it really aligns advisor-client interests: it's not about trading; it's about having an enduring relationship based on mutual respect and trust.

Constructing Portfolios That Work

Within our fee-based structure we have created five models that are very tight—starting with core positions that are typically buy and hold with adjustments as necessary and rebalanced at least on an annual basis.

Surrounding the core are complementary flexible mandates, investment managers with the flexibility to move up and down the credit scale, in and out of duration, go anywhere/buy anything or balance out between fixed income and equities. With this streamlined approach, we are no longer picking different managers and playing the manager madness game. Instead, we are able to sit down with clients and engage in true wealth management planning.

In addition to the fee-based models, where appropriate, we offer a separate bucket for alternative investments, especially when clients are seeking income or broader diversification. We then have a third bucket that focuses on income needs in retirement—for those clients who need assets outside the model that seek to provide a protected stream of retirement income to last a lifetime.

Creating an Enduring Business

We started our transition to a fee-based approach in 1998, an idea borne out of a great deal of research that spoke to this growing area and the ability to create a higher integrity relationship. In the transactional business, there are always going to be conflicts of interest and the possible perception that advice is in some way influenced by the commission made on the transaction.

Essentially, the fee-based model improves client retention because we spend more time on the relationship and focus on the more meaningful aspects of a client’s life. Now I spend more time talking with my clients and focusing on what matters most to them: a comfortable retirement, college education funding for their  children or grandchildren, transfer of wealth and having the life they want.

I only wish that I had transitioned to the fee-based approach a bit sooner, as it has increased our productivity and ability to scale our business. When I pick up the phone and call clients, they know two things: first, there is no transaction cost to them and second, there is no hidden compensation to me. I believe the fee-based structure is the right thing to do in addressing clients’ risk tolerance, overall objectives and then effectively managing their portfolio.

The Fee Conversation

Fees are only an issue in the absence of value. Whatever fee you plan to charge, make sure that your value proposition is supporting it. If a client is only interested in a buy-and-hold strategy, the fee-based approach is not for them. But if a client wants ongoing professional management on a consistent level, then the fee-based model could be very effective. We don’t typically have conversations regarding fee negotiation and I wouldn’t bend anyway. That would be a disservice to every client who understands and appreciates what it is we do.

Our conversation with prospective clients on the fee-based opportunity:

  • Start with us and give it a year
  • If by the end of the year you are not happy for any reason, we will move your account anywhere you want at no cost to you
  • If you don’t think that the fee was worth it, let me know

And what I find is that the relationship just goes on. Through ongoing communications, we constantly reinforce the value of the fee-based approach and that makes a big difference.

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