Fee Only Financial Planner

Benefits of a Fee only Financial Planner or Fee Based Financial Planner

The fee based and fee only financial planner considers all questions, information and advice as it impacts and is impacted by the entire financial and life situation of the client. An integrated approach to financial planning and investment management allows the fee only financial planner to develop individualized solutions that can assist you in attaining your lifetime goals.

A fee only financial planner is generally a Registered Investment Advisor with a fiduciary responsibility to act in the client's best interest.

A financial professional who is a fee only financial planner or a fee based financial planner is held to a higher standard than a stock broker. As an independent fee only financial planner, I am enabled to focus on my clients' individual goals and objectives without concerns about specific product quotas and corporate mandated sales goals.

Large wire house firms often buy securities in bulk and then turn around and sell the stock out of their own inventory. The firm will turn up the pressure on its stock broker sales force to increase sales of that specific investment, which may not be the best choice for a client. Additionally, larger stock broker firms commonly pay stock brokers more for selling the firm's proprietary products.

An independent, fee only or fee based financial planner has fewer inherent conflicts of interest, and generally provides more comprehensive advice than your typical stock broker. We are attracted to the ideal of sitting on the client's side of the table and acting in their best interests.

Another advantage of working with a fee only financial planner is that you are not locked into a long-term contract. Building a mutually satisfactory long-term relationship with clients is my primary goal. With careful listening I attain an understanding of my clients' needs. I also place a big emphasis on financial education. I want my clients to be as informed as possible about good financial management techniques so we can make smart, informed decisions together.

A fee only or fee based financial planner creates a fee structure primarily around managing all of a client's financial affairs. Many of the services we perform for clients depend on an integrated plan that goes beyond investments. For example, before I suggest investments, I need to know clients' goal for the specific funds, how much of a financial cushion they have, their income and expenses. I will ask specific questions about how they envision their retirement or how much they may want to contribute to children/grandchildren's college education. Trying to address one issue in isolation does not include the due diligence that is necessary for comprehensive investment management. Our services strive to be more holistic.

A financial planner, whether fee only or fee based, primarily charges a percentage of assets under management. The advantage of this arrangement is obvious. The more money your fee only financial planner makes for you - that is the more your portfolio grows - the more money the financial planner earns. Our interests are aligned. If we manage your investments, we include comprehensive financial planning advice free of charge. I never want my clients to hesitate to contact us with any financial question. 

In situations where I do not manage the investments as a fee only financial planner, I also offer other options to my clients such as a flat retainer, an hourly rate or a charge specific to the task at hand.

A person's financial life goes through two major phases: growth and accumulation during the working years followed by the need for investment income during retirement. Fee only financial planning is ideal during both the growth and accumulation phases. This applies to affluent individuals as well as those with more modest income and investments. Often clients' goals and objectives change once they enter retirement and need to develop a sustainable retirement income strategy. 

Ideally, social security and pension income would be sufficient to cover expenses during retirement. Unfortunately, many middle class retirees have no pensions at all and find it difficult to generate sufficient income to supplement social security payments. As a fee based financial planner I have to find solutions for these clients to generate retirement income that will last as long as they live and will keep up with inflation. With the availability of traditional pension plans diminishing and the responsibility of retirement income financing shifting from corporations to individuals, my task as a fee based financial planner to find solutions becomes ever more important. I strongly believe that expert financial advice should be available to the middle class, not just to the wealthy.

According to the 2009 survey of the Journal of Financial Planning the main concerns of today's middle class retirees are:

  • Inflation eroding value of assets
  • Health-care expenses
  • Outliving assets
  • Maintain standard of living
  • Insufficient funds for long stay in a nursing home

While a diversified portfolio of stocks and bonds will always be of importance, it may not allow middle class clients to maximize regular income payments, maintain liquidity for emergencies, leave a legacy AND sustain payments for a lifetime. Rather, I believe that for those retirees, a mix or portfolio of product types can help accomplish retirement income goals, just like a mix of asset types can help accomplish asset accumulation goals prior to retirement.

The Bottom Line

Clarify how your financial advisor is being paid. Compensation should always be fully disclosed and transparent. No matter how your financial planner is compensated, the value of your investments should be the top priority. The commission vs. fees debate is a hot topic in the world of financial planning, but it's always best to work with someone you can personally trust, regardless of compensation structure.

I can help you make smart financial decisions aimed at making the most out of the money that you have.

Don't procrastinate! The first step is a free initial consultation so you can determine if working together makes sense for you. There's no cost or obligation. Call (707) 495-7084 or email us using our contact form for a complimentary, no-obligation review to explore your financial planning needs.