OnDemand WTP Pricing Research

Feeling squeezed by pricing pressure? Here’s what to do | Advisor.ca

If you’re feeling pricing pressure, you’re not alone.

At CFA Toronto’s Annual Wealth Conference this week, about two-thirds of audience members said they feel price pressure. (The question was asked and answered via smartphone, with responses tabulated.) In the current environment of low-cost online competition, that pressure comes as no surprise and will likely increase.

What’s a wealth manager to do?

In a conference session on pricing, Matthew Jackson, director in financial services at Simon-Kucher & Partners in New York, suggested a pricing model overhaul. In particular, a fee model based on assets under management likely isn’t sustainable unless modified, he said.

Current pricing may work well now, said Jackson, “but it’s predicated on everything staying the same,” which is a dangerous assumption.

ASSET-BASED PRICING AS INDUSTRY AFFLICTION
Sounding the alarm bell on asset-based pricing isn’t new. Having clients pay more because they give more doesn’t make sense, as many have noted. In most other businesses, the relationship between value and price is linear, with clients getting more as they pay more, said Jackson.

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Feeling squeezed by pricing pressure? Here’s what to do | Advisor.ca.