One of the core compensation models for financial advisors involves fees that are based on client assets under management.
As a result, it is naturally in an advisor's interest to gather, maintain and grow as many assets as possible.
Retirement planning is proving to be a business challenge for many advisors as retirement involves asset decumulation rather than accumulation.
In other words, advisors are in a situation where they are reducing assets under management and subsequently the foundation of their business.
Further, retirement planning is complicated and time consuming, so advisors are potentially paid less for much more work.
The industry is grappling with this issue at the moment and is exploring alternative business models that are more aligned with the task at hand.
Source: Investment News
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