What’s the difference between fee-only planning and asset-based financial planning?
A primary difference between the fee-only and asset-based billing models is that the fee-only model charges clients a predetermined fixed fee for comprehensive financial planning guidance that does not involve direct portfolio management. In contrast, under asset-based compensation models, the fees for financial planning services are typically variable and are tied to the value of the portfolio assets that are directly under the adviser’s management. Under our fee-only planning model we definitely review client portfolios and provide specific recommendations as needed, but responsibility for implementation and ongoing monitoring of such recommendations lies solely with the client. Prospective clients who are seeking ongoing portfolio management, should not use the fee-only model and should enquire about different planning options.
Why doesn’t your pricing model include hourly financial planning?
In our opinion, the conflicts of interest inherent in the hourly billing compensation model are incongruous with the practice of sound financial planning. The initial information gathering is typically the most time-consuming and most important element of the financial planning process. While all billing models have inherent conflicts of interest, hourly billing is the only model that creates a disincentive for the clients to take the time to share detailed background information necessary for sound, comprehensive financial planning.
What financial planning topics do you address?
The core elements of our fee-only financial planning reviews include: • Investment Portfolio Management • Tax Planning & Optimization* • Estate Planning* • Insurance Risk Management • Social Security Planning • Employee Benefits Reviews • IRA and Qualified Plan Considerations • Creditor Protection Considerations • Asset Registration and Beneficiary Designation Reviews * While no part of our review or findings should be construed as specific tax or legal advice, and important element of our review is to raise awareness of potential tax and legal risks and opportunities. We encourage clients to share these insights with their CPAs and/or attorneys are willing to facilitate those discussions upon request.
How does billing work?
We require 50% payment up front and 50% upon delivery of our written report. We will provide invoices and payment may be made via credit card or personal check.
Is your financial planning agreement a one-time or ongoing engagement?
In most cases, our fee-only planning agreements are one-time engagements, but clients are welcome to engage us on an ongoing basis if they choose. Clients may also subscribe to our online financial planning platform at a cost of $25 per month.
Are there any unique services you offer?
Yes. While many financial planners present a document as a financial plan, in addition to our written summary, analysis, and recommendations, all of our clients receive access to an online platform that enables them to centralize and organize all aspects of their financial lives. The platform is free for 90 days from the start of the engagement. For clients who wish to use this platform to maintain and monitor their financial plan over time, ongoing access is available for $25 per month. Additionally, all clients have permanent access to our free proprietary password management software, Password Guru, and we also provide a unique service to help clients expeditiously and inexpensively get their estate planning documents drafted and implemented.
Do you sell investment products?
No. Under our fee-only financial planning agreement, clients are paying only for advice. While we may make specific investment recommendations or provide guidance regarding insurance products, it is the choice and responsibility of the clients to implement those recommendations on their own.
What is your financial planning process?
The generally accepted 7-step financial planning process is as follows: Step 1: Learn the client’s background information and financial circumstances. Step 2: Identify client’s specific financial planning goals and objectives. Step 3: Analyze the data that has been gathered in relation to the goals and objectives. Step 4: Develop a written plan and recommendations. Step 5: Present the plan. Step 6: Implementation. Step 7: Ongoing monitoring. Our one-time flat fee planning reviews encompass steps 1-5. Clients may elect to engage us over time to cover steps 6 & 7 under a separate agreement if they choose.
Am I a good fit for fee-only and/or subscription-based financial planning?
The following are examples of scenarios in which our fee-only models may be an excellent fit: • Consumers who are seeking comprehensive financial planning guidance beyond just investment management. • DIY consumers who prefer to manage their own portfolios, but wish to have an objective professional assessment of their financial position and/or are seeking planning guidance beyond just investment management. • Consumers who are currently working with another financial advisor but wish to obtain an objective second opinion. • Consumers who may be interested in gaining ongoing access to a financial planning platform instead of just paying for a financial planning document. Note: Consumers who are seeking ongoing direct portfolio management are probably not a great fit for our fee-only planning model.
What are your obligations to me as a fiduciary?
All financial planners whose service models include advice pertaining to investment management and securities are held to a fiduciary standard of conduct as described in the Investment Advisers Act of 1940. This standard includes an obligation to place the client’s interest above those of the financial planner, to disclose potential conflicts of interest and theme where possible, and clearly present all material facts. Under our fee-only planning agreement we are transparent in our fee disclosures and the terms of our engagement. Although the fee-only model is sometimes described as being “conflict-free” from an economics perspective, all financial advisor compensation models have certain incentive structures that may conflict with client interests. In the fee-only planning agreement, consumers should be aware that all fee-only planners have an inherent, unavoidable incentive to complete our tasks with as little time and effort as possible.
Are your business practices regulated?
Yes. All financial planners whose service models include advice pertaining to investment management and securities are specifically regulated under the Investment Advisers Act of 1940. This is explicitly spelled out in the Securities Exchange Commission issued Interpretive Release IA-1092, The Applicability of the Advisers Act to Financial Planners. In terms of specific regulatory oversight, ALL financial planners who are governed by the Advisers Act are required to registered with the SEC and to provide consumers with a copy of a plain English disclosure brochure (SEC Forms ADV 2A and 2B) that includes the planners service model, compensation structure, education and professional experience, potential conflicts, and regulatory and/or criminal disclosure histories. These documents are to be provided to prospective clients at or before engaging the planner’s services with updated versions provided at least annually. Consumers may also review the financial planner’s professional and regulatory disclosure history by visiting the SEC Investment Adviser Public Disclosure (SEC IAPD) website at Adviserinfo.sec.gov. Ongoing oversight and enforcement of financial planners whose business models do not involve direct portfolio management is provided at the state level by the offices of each state’s Securities Commissioner. Under our fee-only planning agreement we are transparent in our fee disclosures and the terms of our engagement. Although the fee-only model is sometimes described as being “conflict-free” from an economics perspective, all financial advisor compensation models have certain incentive structures that may conflict with client interests. In the fee-only planning agreement, consumers should be aware that all fee-only planners have an inherent, unavoidable incentive to complete our tasks as expeditiously as possible.