Pershing LLC, a BNY Mellon company, has released a new guidebook, Pricing Strategies to Create Growth: An Independent Advisor’s Guide, which examines the leading pricing strategies among firms and provides best practice guidelines to drive profitability.
In addition, Pershing is launching the Pricing Your Advice tool, which enables firms to explore implementation of different models to price their services. These resources, available to both Pershing and Pershing Advisor Solutions customers, are part of Pershing’s commitment to creating actionable practice management solutions to help advisers and investment professionals grow their businesses, optimize human capital, maximize operational efficiency and manage risk.
“The guidebook’s pricing information and the Pricing Your Advice tool are a powerful combination that firms can use to develop a plan for enhancing firm profitability while improving the value they provide their clients,” says Kim Dellarocca, head of practice management at Pershing.
The guidebook, developed with consulting and research firm FA Insight, reports that keeping firm pricing in line with the business environment is a practice that is often overlooked. Market downturns, increasing regulatory pressures and growing human capital costs are just a few of the factors that can provide a different approach to pricing. While the operating environment continues to evolve, pricing strategies have not kept pace. Only 31% of all firms surveyed by FA Insight in 2010 review their pricing structure on an annual basis to ensure that it is at suitable levels.
“Maintaining profitability in both strong and more challenging markets requires a fresh look at pricing practices, and an annual review is recommended to ensure the continued relevancy of a firm’s model,” says Eliza De Pardo, principal at FA Insight. “As a firm’s offering to clients changes, so too must the pricing method, pricing level and potentially the collection methods deployed.”
The Pricing Your Advice tool provides a practical approach to calculating firm profitability and enables advisers to calculate hourly rates, specify client operating expenses, identify breakeven points and develop effective pricing plans to manage profitability through the changing environment.
(CM)