To offer a more accurate pricing model for its advisory services, Hilliard Lyons has signed off on a multi-year agreement with PriceMetrix for turnkey access to their CommissionCheck pricing program.
According to Chris Russell, director of business development at Hilliard Lyons, the new technology will allow advisors to see where their commission prices stand relative to the rest of the industry and provide and average price relative to similar firms making similar trades.
“It says ‘here’s what you’re charging and here’s what everyone else is charging and you can really be charging XYZ based on your value,” he said. “It looks at regional firms and larger firms, so at that point you can decide ‘OK, I’m doing a lot more for my client, I shouldn’t be charging at these discounted rates.’”
CommissionCheck compares data from 3.2 million investors, 500 million transactions, 1 million fee-based accounts, 4 million transactional accounts and over $900 billion in investment assets to determine its pricing metrics and build a real-time scale for financial advisors.
Having access to that information, Russel expects, will likely push prices somewhat higher overall.
“I’m predicting [commission] goes up. The guys who are charging above average already realize their value and are getting paid for their advice. The financial consultants who are charging below average are sometimes unaware that they’re giving away their value, so they’ll move it up to at least an average price,” Russell explained. “We do anticipate our advisors’ overall pricing to improve.”
Currently, advisors at Hilliard Lyons gauge the accuracy of their commissions prices based on a monthly report distributed by the company, which was not the most accurate method, Russell said.
“It’s hard to make a decision on what you should charge your client without knowing what the market is,” he noted. “Before they didn’t have this information and without that it was hard to know whether they were charging above or below their value.”
Additionally, the current quart-to-quarter market volatility has made it difficult for advisors to accurately determine their value, especially as some offer clients discounts, which Russell refers to as “sympathy pricing.”
“As markets go down, [advisors] discount even more and when the markets rebound, you don’t see commission charges rise back up, so this will allow them to keep on top of that,” Russell said.
The CommissionCheck software will be integrated with Hilliard Lyons’s order entry system in a test phase for the next 60 days before rolling out across the firm’s network of over 400 advisors and 70 offices around the South and Midwest.
PriceMetrix, which is headquartered in Toroto, Ontario, currently delivers data to over 25,000 advisors in North America.