More fee-for-service models, please!

Dana Rhodes of Axtella

Axtella executive says the advice industry faces challenges in connecting with younger clients.

Everybody wants to rule the world. And millennials and Gen Zers are starting to play a bigger role in the wealth management and financial planning market.

Dana Rhodes, senior vice president of advisory services at Ann Arbor, Michigan-based Axtella, a network of two broker-dealers and an RIA, says younger generations are propelling a few of the industry’s recent trends, like the increased adoption of unified managed accounts and the growth in fee-for-service, or subscription-based, models.

“The days of advisors only managing portfolios themselves or only outsourcing, we’re not seeing that anymore,” Rhodes says. “We’re seeing more advisors working with their clients and building solutions where they’re blending the best of both worlds to provide solutions for their clients.”

She noted that one of the big challenges the industry faces is connecting with that next generation – not just the next generation of advisors, but the next generation of clients, too.

“As clients start to get younger, and you start to work with that next gen, we’re seeing a lot more of the fee for service, particularly the recurring or subscription model, where advisors are providing those services on a regular recurring basis and getting those fees,” Rhodes said.

This lines up with a recent AdvicePay study that found more advisors were broadening their service offerings to include fee-for-service models.

Younger clients are “paying for streaming services, so they’re used to paying that sort of monthly subscription model and so for them, at this point, they don’t have a lot of wealth and a lot of assets under management, but they still need advice,” Rhodes said. “They still need the help of a financial professional.”

The model makes sense given what young people are used to, but it also makes sense from an advisor’s perspective, Rhodes points out. Advisors can give younger clients advice on managing debt or saving for a future event, and ultimately retirement, while still getting compensated. They’re also maintaining a mutually beneficial relationship.

When advisors meet young prospective clients earlier, they get to understand who those clients are and what’s important to them, “because when you start talking about finances, it becomes very important, and everybody has different priorities there,” says Rhodes. “They understand what those priorities are by working with them early on, and it creates opportunities down the road.

“They may have high debt, they may have different needs, but if you’re working with these young professionals down the road, they will have more assets, and they will have more sophisticated needs,” she added. “They’re building that relationship early so that they can retain it throughout the lifetime.”

Rhodes’ role at Axtella and its three firms, all based in Ann Arbor – Sigma Financial, Parkland Securities and Sigma Planning, its independent firm – is focused on creating solutions that allow financial advisors to be able to work with their clients and to grow their businesses. The most rewarding feeling for Rhodes is figuring out what advisors are asking for and taking the “very direct” feedback to build solutions that solve their needs.

“I think that’s translatable, that’s what they’re doing with their clients,” she says. “What are the things that cause them heartburn that they wish they could do more easily, and being able to take that information, and turn it into solutions for them that they can apply in their business to help them grow and to flourish?”

Axtella also likes to stay innovative. Rhodes says the firm is marrying the experience of service with the innovation.

At the end of the day, it’s “a people business,” she said. “[We’re] cultivating that powerful personal connection, creating this collaborative environment, and providing that support that is so personalized to the advisor, in conjunction with the technology that they’re getting.”

Part of the innovation Axtella has to offer is its Axis World Tour, a conference that tours across the country, at which advisors can attend informative presentations and training on select services and brands.

“We’ve set it up almost like a concert type of thing, with cool concert t-shirts, Spotify playlists, and VIP passes,” Rhodes explains. “It’s taking our industry and putting a new spin on it to get people engaged and excited about what we’re doing and where it’s going versus, ‘Here’s a new thing I have to learn.’

“It’s really just turning it into something fun and collaborative to keep people’s interest and to keep their passion,” she added.

Name: Dana Rhodes
Position: Senior vice president of advisory services
Company: Axtella
Founded: 1983
Firm AUM: Approximately $22 billion