What is an Advice-Only Financial Planner

What is an advice only financial planner?

An advice-only financial planner is a defined as someone who:

  • Provides financial planning services only;
  • Gives financial advice but does not manage investments for a fee;
  • Only charges a fee for providing financial planning services;
  • May provide overall guidance on how to manage investments, such as assessing a client’s risk tolerance, without actually implementing these recommendations and/or charging a fee for it;

Example: I charge $6,000 a year for personal financial planning services, but receive no commissions, no AUM, no third party payments… and so while I appear to be expensive, I can usually save clients more than $10,000 over an AUM advisor or financial industry representative. – I charge the same price for flat fee financial advisory with investment advisory, so that we can chose the service best for you.

An advice-only financial planner is not somebody who:

  • Has discretion over client assets
  • Manages assets for a fee
  • Manages AUM (Example: “I charge 1% on your assets as my fee.”)
  • Is paid to implement specific investment recommendations on a client’s behalf
  • Provides financial planning for a fee, and investment management services for an AUM fee;
  • Provides financial planning for a fee, and receives commissions for selling insurance or brokerage products;
  • Offers clients the option to be charged either a fee, a commission, or an AUM fee. No multiple fee options provided; there is only one option provided;
  • Makes more money when the value of the assets in the client’s portfolio goes up;
  • Works for a wirehouse or broker dealer firm and charges commissions;
  • Is dual-registered;
  • Is a hybrid advisor;
  • Charges an AUM fee in addition to a planning fee;
  • Charges commissions in addition to a planning fee; or
  • Earns commissions for selling insurance in addition to a planning fee.

Some advice-only financial planners:

  • Adjust their contracts for inflation; or
  • Provide differing levels of service for different fee amounts.
  • Compensated by hourly, subscription, flat fees, and even retainer accounts

Why work with an advice-only financial planner?

  • Puts the focus entirely on planning for your life’s goals which you have more control over than the stock market
  • Puts the client at the center and eliminates the products from the offering
  • Reduced conflict-of-interests: no incentive to encourage managing more of your assets instead of recommending the funds be utilized for other purposes such as paying down debt, etc.
  • Transparency: you know the exact price you’ll be paying
  • Simplicity: no calculations necessary to understand fee