Vanilla

Nov 20, 2025

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How Advisors Are Moving Upmarket by Redefining Value

Industry data reveals the strategies behind revenue growth in wealth management—and why the most productive advisors serve fewer clients, not more.

On November 13th, Vanilla hosted Michael Kitces and Steve Lockshin for a conversation about building thriving practices in today’s market. Their insights, backed by decades of industry research and direct experience managing billions in client assets, challenge conventional wisdom about scaling an advisory firm. Below are their key takeaways.

The Stability of Advisory Fees

The median advisory fee has remained at one percent for over twenty-five years. This benchmark held steady through the introduction of robo-advisors, algorithmic trading, AI-powered portfolio management, and countless other technological innovations that promised to disrupt the industry.

Kitces, who has tracked industry benchmarking data since the late 1990s, noted that while the range of fees may have narrowed slightly, the median hasn’t budged. The fee stability reflects something fundamental about how advisory businesses operate and compete.

Technology creates efficiency in specific operational areas. Advisors use this freed capacity to expand their service offerings. Firms that deliver more comprehensive value propositions continue to command the same fees. Firms that simply capture efficiency gains as margin eventually face competitive pressure from those reinvesting in client value.

The firms that get efficiency and reinvest outperform over time the firms that don’t.

The Counter-Intuitive Path to Revenue Growth

Research from Kitces’s firm reveals a striking pattern among the highest-earning advisors. They serve fewer clients with substantially larger account sizes.

CFP professionals who take a holistic financial planning approach generate approximately 40% higher revenue than those focused primarily on products or portfolios. The gap extends across multiple metrics: average client size, portfolio values, productivity per advisor, and lifetime income.

The most productive advisors don’t scale from 100 clients to 200. They move from 100 clients with $1 million in assets to 50 clients with $5, $10, or $20 million. This transition requires deeper expertise and more sophisticated planning strategies—particularly in domains like estate planning, tax optimization, and family office services.

When you get to people that have taxable estates, the value proposition shifts entirely. Saving a couple of basis points on a portfolio pales in comparison to preserving thirty or forty percent of gross net worth through effective estate tax strategy.

Estate Planning as Market Entry Point

For advisors targeting ultra-high-net-worth clients, estate planning represents both table stakes and competitive differentiation.

Federal estate tax exemptions create clear planning opportunities for larger estates. State-level estate taxes, with exemptions as low as $3-3.5 million in states like Washington, expand the addressable market significantly. The planning work generates measurable seven- and eight-figure tax savings—value that investment alpha alone cannot replicate.

Lockshin, who built one of the largest independent RIAs serving ultra-affluent clients, emphasized the client relationship impact. Failing to address estate planning leaves clients and their families exposed to substantial, avoidable tax liabilities.

The Capacity and Competency Challenge

Moving upmarket requires two things: available bandwidth to deliver sophisticated services and technical knowledge to execute them confidently.

An advisor managing twenty-two client meetings per week lacks the time to conduct multi-meeting estate planning processes involving clients, their attorneys, and other advisors. Kitces identified capacity as the primary barrier preventing advisors from implementing deeper service models.

The second barrier involves competency. Advisors need confidence before initiating complex planning conversations with clients. The professional risk of presenting strategies incorrectly outweighs the opportunity cost of waiting to build expertise.

Estate planning platforms help bridge both gaps—enabling advisors to model complex scenarios, run calculations accurately, and present information clearly.

Fee Structure Misalignment

The AUM model creates structural challenges for firms delivering comprehensive planning services.

When all revenue derives from assets under management, investment teams naturally receive priority as “revenue producers” while planning teams get categorized as “value-add” cost centers. This dynamic makes sustained investment in planning capabilities difficult, particularly as firms scale.

The model also fails to account for service complexity. Two clients with identical portfolio values may require vastly different service levels—monthly meetings versus annual check-ins, complex alternative investments versus passive indexing, extensive tax planning versus straightforward situations.

Lockshin’s firm addresses this through complexity-based fixed fees. Their calculator accounts for asset management, planning scope, estate planning requirements, tax situation, and client-driven complexity factors. The fee adjusts based on actual service delivery rather than portfolio size alone.

In most service industries, pricing reflects the scope and complexity of work performed. Advisory services deserve the same clarity.

Differentiation Through Specialization

The firms demonstrating highest efficiency levels also show the strongest differentiation.

Firms serving well-defined client segments can systematize their planning processes, technology stack, and service delivery. When every client fits a consistent profile, the firm builds repeatable systems serving those specific needs. The specialization enables both operational efficiency and differentiated expertise.

The least efficient firms are often the least differentiated—serving anyone who meets a minimum asset threshold regardless of their specific needs or circumstances. Deep specialization in a particular clientele allows firms to develop capabilities generalists cannot match.

The Relationship Multiplier

Comprehensive planning creates client relationships fundamentally different from product-based advisory models.

When clients spend many hours across multiple years explaining their business complexity, family dynamics, estate planning goals, and financial concerns, the relationship depth becomes difficult to replicate. Clients who feel truly heard and understood face a daunting prospect: re-explaining all of that context to a new advisor.

The dynamic mirrors client relationships with attorneys, CPAs, and physicians. Service providers who understand complex, accumulated context become increasingly valuable over time. Relationship depth emerges as an inherent component of the value proposition rather than an add-on amenity.

Adding services like estate planning, insurance coordination, and multi-generational family conversations compounds the relationship effect through tangible and emotional touchpoints that extend beyond portfolio management.

The Path Forward

Both Kitces and Lockshin expect AI and emerging technologies to follow historical patterns. Previous technological waves created efficiency that advisors reinvested into expanded service offerings. Margins remained stable. Client value increased. The competitive bar rose.

Advisors who haven’t figured out how to transition into deeper services within the next five to ten years will find themselves left behind. The path forward involves using freed capacity to deliver value propositions that justify current fee levels and defend against competition—whether that means moving upmarket, going deeper with current clients, or opening new market segments.

The market continues rewarding advisors who deliver comprehensive, holistic planning. The performance gap between planners and non-planners spans 40% across multiple metrics. The competitive dynamic remains straightforward: to stay in the game, you need to keep adding value. Advisors who don’t will lose clients to those who do.

Want to hear the full conversation? Watch the webinar replay featuring Michael Kitces and Steve Lockshin as they dive deeper into productivity, pricing strategies, and what it takes to move upmarket.