Episode summary
Value-Based Pricing And Charging As Much As The Market Will Bear - Kitces & Carl Ep 202
Financial Advisor Success (Kitces)
· · 30 min · Hosts: Michael Kitces · Guests: Carl Richards
Summary
The conversation centers on a pricing dilemma: if an advisor can run a successful business at one fee, is it ethical to charge a client more when that client is clearly willing to pay more? The host frames the issue through examples like hourly billing and AUM fees, then asks whether the market’s willingness to pay should set the price or whether a cost-plus mindset should cap it.
Carl Richards pushes back on the idea that there is a single moral answer. He treats the gap between what could be charged and what is charged as “goodwill,” something that can build trust, long-term retention, and room for the advisor to do more good elsewhere. He also says his own preference is not to maximize profit but to focus on “enough” and on impact.
They also discuss capacity and selectivity: once an advisor’s “bus” is full, every higher-fee client may mean fewer available seats for someone else. For some firms, charging more from one client can fund lower-cost or pro bono work for others; for others, the right answer is simply to stay full and stop growing.
Key takeaways
- Carl Richards says the spread between what an advisor could charge and what they actually charge can be treated as goodwill, not lost revenue.
- The host argues that value-based pricing becomes ethically tricky when a client is willing to pay more than the advisor’s stated fee or cap.
- Both speakers note that limited capacity forces advisors to choose who gets the next seat on the bus, making fee caps and client selection interconnected decisions.
- Carl Richards prefers “enough” over maximizing profit and says he would rather use profits as permission to create impact.
- The host says some of the happiest planners are those who decided years ago that a finite client roster was enough and never looked back.
Notable quotes
“I call that goodwill, and and and because that's not the game I'm interested in”
“I like having some goodwill priced into things”
“is it good business to charge as much as the market will bear”
“If someone's willing to pay extra because they value you that much, and that lets you give away another seat for free, is that better”
How the episode opens
Greetings, Michael. — Hello, David Carl Richards the third. — I'm thinking about changing my name. The kids and I talked about this the other day cuz we've got a daughter getting married and they're talking about their last names. And I was like, I want to change my name to Zeke. I think I might change my name to Zeke or Thor.
Your first name or your last name? — Well, I just like I would have to use the one you go by. I mean Zeke Richards. — If you're becoming Thor Carl Richards the third, are you still going to go by Carl or are you going to pick Thor?
Thor the third. I'm just going to skip all the rest. — Uh let's not spend any time on that. How How are you? What are we talking about today?
I'm doing well. I'm doing well. I So, I have what I think is an interesting um conversation for you today.
I I'm going to start with a hypothetical example. I don't I I may be able to come up with a better one as we go, but I I I think this will will get the discussion will get the discussion going. So, imagine for a moment I'm an advisor and I figured out the value of my time is about $300 an hour to do what I want to do.
It's roughly 2,000 working hours in a year. If I can, you know, do $300 an hour things with my time, I generate $600,000 of revenue, pay my bills, and I make a really good income. Uh net net take home, right?
And uh uh uh There are lots of frameworks out there that use some version of this, right?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- value based pricing
- client fees
- advisor goodwill
- business capacity
- pricing growth
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Financial Advisor Success (Kitces), this episode and its artwork belong to Michael Kitces. Octagon is not affiliated with the show; this page is an independent summary.
