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
