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If you’ve been following our blog, you know the central role the retainer model plays in our community philosophy. ACP member Chip Simon referred to the retainer model as the “heart and soul” of his practice and detailed how ACP shaped it immeasurably. 

We are fortunate to have built a system that fosters excellence, trust, care, and community in the financial space, and the retainer model is a significant part of that practice. 

Today, we are going to dive into the retainer model, extracting three central tenets it provides our advisors and the clients they serve. Information for our blog today came from an ACP member feature podcast on The American Institute of CPAs, Personal Financial Planning Division. If you’re interested in learning more, check out the full episode here.

The show featured three prominent ACP members—Chip Simon, Ed Fullbright, and Sheila Padden. We are delighted to walk you through the three “r”s of the retainer model and how it helped these and other members grow practices they love. 

What Is the Retainer Model?

Before we discuss the ins and outs of the retainer model, we first need to look at what it is and how it differs from other financial models out there. 

The retainer model outlines a specific price for services which are paid for periodically. Most of our members establish an annual retainer which their clients pay quarterly, as an example. Keep in mind, the retainer model simply orchestrates the pricing system, not the actual pricing itself. Properly pricing your services within the retainer model is hugely important to ensure you are suitably compensated for the work you do.

Not sure if your pricing adequately reflects your value? ACP’s pricing resource can give you the tools, resources, and confidence to begin pricing your services to align with the value you provide clients. 

Other pricing models outside the retainer scope include a project-based flat fee, hourly billing, assets under management, commission, and even a combination of these elements depending on the services provided. While each of these models offers benefits, at ACP we found that the retainer model provides a backdrop for advisors to do their best work and clients to find the most value. 

Is the Retainer Model Right for You?

Here at ACP, we are passionate about the results our advisors have seen after implementing the retainer model. They can provide more comprehensive services, develop deeper and permanent relationships with clients, and concentrate on their personal goals and aspirations. 

Many of our ACP members apply a tax perspective to their business, whether it’s through tax preparation, comprehensive tax planning, or both, our members know the added value proposition that tax planning can bring to the clients and their business. 

This makes CPAs, EAs, and other tax professionals an excellent fit for the retainer model. How do you know if it’s right for you? Let’s take a look. 

• Are you looking to expand into wealth management?
• Do you find yourself giving away a lot of key financial planning advice without getting paid for it?
• Would you like to smooth out the tax-season treadmill and bring more balance to your practice?

If you answered yes to any of these questions, the retainer model could be a great fit for you. Now, let’s take a look at a few things that make the retainer model so special. 

The First R: Revenue

The retainer model encourages a steady stream of revenue, even through tough economic times like the 2008 crisis and the current coronavirus pandemic. This provides immense comfort to advisors and also clients who know that their advisor is always deeply engaged with their finances in both tough and prosperous times. 

Remember, the retainer model calculates an annual flat fee that is paid throughout the year, often quarterly or monthly. This approach frees the advisor to provide the highest caliber service and frees the client from hourly billing. Our advisors love that clients can call them with any question, concern, or idea without worrying about billable hours. Chip mentioned that with hourly billing clients have their eye on the clock, not the plan. The retainer model removes that obstacle. 

The retainer model brings consistency to your business profits. Instead of revenue being tied to an unstable market, it is tied to the unique services you provide to clients. Your fees represent the comprehensive, holistic service you give. 

Operating under the retainer model opens you up to this comprehensive lens because you can analyze a client’s estate plan, tax situation, investments, insurance, cash flow, net worth, goals, and more and know that you are getting paid for that work. 

This comprehensive view was particularly moving for Ed as he didn’t have to rely on outside investment firms to do the work for his clients, rather he could apply his high standards to every client’s investment plan himself. He said that the retainer model put him and his firm “in the driver’s seat.”

With carefully projected fees, an advisor can more easily plan their business cash flow and expenses throughout the year. They know the revenue they can expect on an annual basis and aren’t tied to short-term fluctuations of the market. 

It also streamlines the billing process and eliminates any client confusion about what fees are charged and why. There are many ambiguities concerning financial fees, and the retainer model seeks to provide a clear solution. 

Also, the retainer model allows advisors to allocate their time in more useful and productive ways. Sheila noted that when she billed hourly, she became more self conscious of what she was doing and the time it took to complete a certain task. But with the retainer model, she doesn’t have to worry about doing an extra couple hours of research or completing a task faster than normal because it’s not about the time you spend, rather the value you provide. 

The Second R: Relationships

Each podcast panelist agreed that the retainer model altered their relationships with clients in deeply profound ways. They each noted how the comprehensive model brought them closer to their clients and the things that mattered most to them like family, friends, hopes, dreams, and aspirations. 

Taking an immersive approach with financial planning opened up so many doors for both advisors and clients alike. It provided a space for vulnerability, openness, and trust, which are all key facets of a successful planning practice. 

Sheila emphasized that she loved being on the same side as her clients. She felt the retainer model actively eliminated the conflict of interests and brought them both to the same playing field. Knowing her clients as well as she does, Sheila sees herself as a guide and coach, synthesizing their financial life while also walking along with them, side by side, through it all.  She finds it a privilege to be able to do the work she does and support her clients in such a powerful way. 

Alongside deepening client relationships, the retainer model grants space for advisors to prioritize their own goals, dreams, and wants for the future. All the advisors mentioned that the retainer model allowed them to carve out time for themselves, their families, and outside pursuits. 

The Third R: Retention

The retainer model not only stabilizes revenue and galvanizes relationships, but it also creates greater retention. Ed estimates that his firm secures a 95% retention rate on average. Sheila said that out of 30 clients, she only had one decide not to renew. Chip found that clients remained with him throughout their lives.

As you can see, the retainer model encourages clients to stay. When you foster an environment of trust, care, and excellence, clients tend to stick around. The all-in approach with the retainer model helps advisors deliver exceptional service and care year to year, leading clients to achieve their most noteworthy financial goals. 

This consistency is excellent when building a practice but can present a challenge in terms of growth and succession planning. Each advisor has their own approach to growth, and the ACP model supports all of those visions. Some advisors want to expand their team whereas others utilize professionals like virtual assistants or marketing teams to help lighten the load and keep them focused on the work they love. 

Chip, Ed, and Sheila all said that the tools, resources, and community at ACP helped them build and grow their practices in new and exciting ways. 

R Is For Retainer

The retainer model can open many doors to your practice. It provides space to deliver optimal service in a comprehensive, holistic format. To conclude the podcast, each speaker noted one word that embodies what the retainer model did for them, and it was so special that we wanted to share it with you today. 

• Sheila – Freedom
• Ed – Holistic
• Chip – Trust