Adjusting Fees for Services: Compliance and Operational Considerations

Is it time to update your advisory fee schedule?

Evaluating your fees isn’t just about increasing profitability—it’s about ensuring your firm’s long-term success while maintaining compliance with industry regulations. Whether you charge based on Assets Under Management (AUM), financial planning fees, or a hybrid model, a well-structured fee update can improve both client satisfaction and your bottom line.

In this post, we’ll cover two key aspects of adjusting your fees: evaluating firm profitability as part of a fee increase, and benchmarking fees with other advisers in your niche. 

1. Maintaining the Appropriate Records

In a majority of cases, changing client fees means gathering an updated signature from the client, either through an amended contract or an addendum to the existing agreement. Firms are advised to review how to make this process as operationally efficient as possible.

🔹 Review your current contracts – Be clear as to whether or not the requirement for a client signature is specifically stated in your existing contract with the firm. 

🔹 Consider the timing of the changes – For instances in which the new fee cannot be applied prior to gaining client signatures, provide clients with the notification and new agreement to sign as early as possible to meet your desired timeline. 

🔹Documentation consistency and alignment  – Ensure the fees, terms and conditions on Form ADV Part 2A are in alignment with your updated current contract. Best practice is to make sure the updated ADV has been filed, prior to distributing your new agreements. 

🔹Grandfathered clients – Create clear reporting that delineates between clients that may be grandfathered into the firm’s previous fee schedule, and clients for which the new fee schedule will apply. 

2. Evaluating Firm Profitability Before Raising Fees

Before making changes to your fee structure, take a close look at your firm’s financial goals. Increasing fees without a clear understanding of your costs, profit margins, and service value can create compliance risks and client dissatisfaction. Here are key factors to consider:

🔹 Net Worth and Income Calculations – Ensure that the fees you charge align with your service level and client demographics. Clients with different financial situations may require different levels of service.

🔹 Service Costs vs. Revenue – Assess whether your current pricing allows your firm to remain sustainable. If operational costs have risen due to regulatory compliance, technology upgrades, or staff expansion, a fee increase might be necessary.

🔹 Billing Transparency and Disclosure – The SEC's recent fee examination found that many RIAs overcharge due to calculation errors, incorrect tiering, or unclear disclosures. Before adjusting your fees, ensure your billing and invoicing process is fully compliant with SEC regulations.

🔹 Client Retention Impact – Consider how a fee increase may affect client relationships. Providing clear, upfront communication about changes and emphasizing the value your firm delivers is essential.

3. Benchmarking Fees with Other Advisers in Your Niche

How do your fees compare to similar firms? Fee benchmarking ensures that you remain competitive while justifying your pricing strategy. Here’s how to analyze your position:

🔹 Compare Across Business Models – Do you charge based on AUM, flat fees, or a hybrid model? Each structure has different industry norms, and comparing yourself to similar firms ensures your pricing remains fair and competitive.

🔹 Regulatory Compliance & Best Practices – The SEC emphasizes the importance of clear, fair, and consistently applied fees. Benchmarking against other RIAs in your niche can help ensure that your fee disclosures meet regulatory standards.

🔹Client Expectations & Market Trends – Clients today expect transparency in fee structures. If competitors in your niche offer a different pricing model that provides better perceived value, consider whether an adjustment is needed.

Final Thoughts: Is Your Billing Process Up to Date?

Adjusting fees requires a strategic and compliant approach. Whether you’re fine-tuning your AUM-based fees, financial planning costs, or billing methodology, take the time to review your profitability, benchmark against competitors, and ensure compliance with SEC regulations.

These materials have not been reviewed or approved by any regulatory agency, and represent solely the interpretative opinions of Synergy Compliance Education (“Synergy”). To the fullest extent permissible pursuant to applicable laws, Synergy disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose. In no event shall Synergy have any liability for damages, losses, and causes of action for accessing these materials.