Recently I’ve been seeing ads by one of our nation’s largest brokerages. In the ad, the broker (an actor) has a captive group of clients seated at a conference room table and he asks them to turn to a specific page number in their financial plan binder; a rather high page number. At this point, the clients start asking questions, good questions, about changes and real life situations. The ad annoys me for several reasons. Let me explain a couple of those reasons.
One reason this ad annoys me is that it’s an ad for a brokerage firm. Brokerages don’t really do ongoing fee-only financial planning. One could argue they don’t do financial planning. Brokers have a very specific job and that is to get your assets under management and bill a percentage of those assets on an ongoing basis. Many want to trade your portfolio. That’s another way they earn their living, by trading and charging commission on those trades. It’s just the nature of their business and they are doing what they are tasked to do. I’m not beating them up; brokers are doing exactly what they are supposed to do, but it shouldn’t be confused with financial planning.
Mainly, this ad annoys me because it isn’t really financial planning. In particular, ongoing planning, which is what most people really need these days. Having the actor in the ad ask the clients to turn to a certain, high page number in their plan represents an outdated way of planning in my opinion. Gathering a ton of data and spiting out a large, 50- or 60-page financial plan for a client with lots of tables, graphs, and line-after-line of projections is, well, boring. It’s also overwhelming for most clients and the details that need to be focused on and the actual “to do” items get lost. This is why many clients usually do not implement several of the important key items in their plan.
These are only two examples of why the ad bothers me, but these reasons are at the heart of why I love ongoing fee-only financial planning. I’m not going into what I think are the shortcomings of the brokerage model. I mean, if you want to hand your money over to someone and give them an annual percentage of your total assets and feel you are getting good value, that’s up to you. Personally, I think paying for ongoing planning is the better deal.
One reminder, don’t confuse fee-only with fee-based – the two are very different! Read more about that here. Let me share just a few reasons why I feel ongoing, fee-only financial planning is the better approach.
Monthly fee-only planning is affordable. You pay a steady amount each month like your gym membership. Subsequent years are actually a bargain!
AARP, October-November 2018
No commission conflicts. By not selling financial products, I can help you determine which will likely serve you best. Whether selecting funds in your 401(k) or opening a new taxable investment account, I am not collecting a commission so we can assess which is best for you.
Opportunity spotting. Knowing when to outsource to another professional such as an estate planning attorney can be invaluable.
Working on items month-to-month is more realistic than getting a massive ‘to do’ list of items in a one-time plan. Implementation of recommendations increases. I don’t like giving clients a large, multi-page plan and then going over each area until their eyes start to glaze over. It’s really way too much data to take in at one time.
Responsiveness. If you have a major life change or a particular financial question crops up, I’m already on your team and we can address the issue.
Relationship. As we work together over time, it becomes easier for me to spot opportunities and respond to your changing life events and goals. By signing on for ongoing, fee-only financial planning, you don’t have to worry about being on the clock for billing when you need to ask a question, or have a sudden change in your financial situation. The relationship is already there!
Things change. Changes in tax law, benefits, and life in general are opportunities to reassess and update or modify goals. It’s good to have someone who knows your history.
These are just a few of the reasons I love ongoing, fee-only financial planning. When you come to me, we do start gathering data via my financial planning software. But more importantly, I listen to what the you want to tackle first. We can always add to the personal data over time. I use an annual client services calendar to provide a general guide so getting started is not so overwhelming. We tackle an item or two each month. That way, the ‘to do’ list is not so overwhelming.
My clients get a monthly Money Do list to remind them of what they should be working on. We also meet in-person or via Zoom at least three times per year. More if needed or something comes up. This weekly blog also serves as a reminder that I am here if needed. Occasionally, a blog topic will trigger awareness for a client that they need to take action on a topic.
With monthly planning, we can be flexible. If there’s a major life change such as a new job, or loss of employment, I’m available to help guide you through that transition. For example, losing a job at age 33 is very different from losing a job at age 55. The immediate recommendation would be very different for each client. For example, with the 55-year-old, we would consider whether the Age 55 Rule is applicable. For the younger client, we would look at other options.
If cost has been holding you back, reach out to me and learn more. Financial planning can help align your goals, maximize benefits, address taxation, and help with a host of other financial concerns. As an independent CERTIFIED FINANCIAL PLANNER™, I can help you. Contact me and let’s get started. #talktometuesday #getstarted #HowIcanHelpYou #GetHelp #Hireaplanner #CFPPro #savemoney #feeonly