Mispriced AUM Fees Due to Inconsistent Discounts and Household Aggregation Failures
Definition
In wealth management firms, advisors apply inconsistent discounts or fail to aggregate related household accounts, resulting in clients not qualifying for correct fee breakpoints. This leads to 20% of new relationships being mispriced at outset, embedding revenue shortfalls in client agreements. The average deviation of 12 basis points compounds annually as AUM grows, creating hundreds of thousands in unrealized earnings over time.
Key Findings
- Financial Impact: $72,000 per year per cohort of $60M new AUM
- Frequency: Monthly - recurs with every billing cycle
- Root Cause: Unchecked advisor discretion, poor householding processes at onboarding, and lack of pricing governance
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Investment Advice.
Affected Stakeholders
Advisors, Billing teams, Compliance officers
Deep Analysis (Premium)
Financial Impact
$16,000 annually (mass affluent cohort: $300k-$1M avg AUM; 20% miss rate; 12 bp deviation compounds over 3-5 year relationship) • $18,000 annually (12 bp deviation × $60M cohort × 20% miss rate compounding over 2 years on average $500k-$2M portfolios) • $18,000-$36,000 per year (12 bps deviation on $150M+ managed across HNI segment)
Current Workarounds
CRM creates Word document or email with account list; Ops manually enters into billing system; when new vehicles added, discount logic breaks • CRM documents relationships in CRM notes (free-text); Operations manually re-discovers relationships from statements; 30% miss the aggregation • CRM relies on memory or email to request retroactive aggregation; Operations responds 6-12 weeks later if at all
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Related Business Risks
Outdated Fee Schedules and Contract-Disclosure Misalignments
Overbilling Due to Household Aggregation Failures Leading to SEC Risk Alerts
SEC Examinations Failing Best Execution Documentation Requirements
Suboptimal Trade Execution from Inadequate Broker-Dealer Evaluations
AML Screening Audit Failures and Enforcement Actions
Facilitated Money Laundering via Weak AML Screening
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