financial planners

Why You Should Use a Fee Only Financial Planner

By Lisa Copely 22 August, 2023 2 mins read

financial planning association of michigan

Why should you pay a fee only for a financial planner? A fee-only financial planner adheres to strict fiduciary guidelines and is held to high ethical standards. Below are some of the advantages of fee-only financial consulting. They act as your fiduciary and ensure that your interests are always considered first. Second, they are more likely be independent. This is an important consideration if you have a lot of money to invest.

Fee-Only financial advisors adhere to strict fiduciary standards

In contrast, Fee-Only financial planners are independent and don't earn any commissions or referral fees from other parties. This means they are less likely be affected by conflicts and can offer more objective advice. Here are some benefits to working with a fee only financial planner:

They act as a fiduciary

Most fee-only financial planners serve as fiduciaries. Fiduciaries must give advice that is best for their clients' interests. This includes suitability. The recommendations must be appropriate for their client's financial circumstances and objectives. This means that advisors are obligated by law to act in client's best interests and may not be compensated to ensure they provide the best possible care for their clients.

They are held to a high ethical standard

All financial planners must use the Fee Only label as required by the CFP Board. This standard was introduced by the CFP Board in 2008. Fee-Only financial planning is held to the highest ethical standards, and requires the planner to disclose all sources of compensation. A planner can have financial relationships with any related person or entity. A financial planner may have a relationship with a relative, a business partner, or another non-affiliated person.

They are more likely than not to be independent

Financial planners who charge a fee only do not receive commissions for recommending products. They are more likely spending time reviewing your financial situation and discussing ways to improve it. Because fee-only financial planners are not compensated by products they sell, they are free to recommend the best options for your money. Also, fee-only financial professionals may be more likely to negotiate fees for you. Here are some characteristics to look for when choosing a fee-only financial planner.

They are more expensive

You may have heard that fee only financial planning is more expensive than fee-based planning. It is partly true. It is possible for a fee-only planner to charge a flat rate, an amount per hour, or a portion of the assets under their management. If you are looking for simple advice, regardless of the fee structure, it is worth considering the cost of working alongside a fee-only financial planner. A fee-only financial planner may be more expensive for a number of reasons.

FAQ

How to Begin Your Search for A Wealth Management Service

You should look for a service that can manage wealth.

Has a proven track record
Is based locally
Offers complimentary consultations
Provides ongoing support
Is there a clear fee structure
Has a good reputation
It is simple to contact
You can contact us 24/7
A variety of products are available
Low fees
Does not charge hidden fees
Doesn't require large upfront deposits
A clear plan for your finances
A transparent approach to managing your finances
This makes it easy to ask questions
Have a good understanding of your current situation
Learn about your goals and targets
Are you open to working with you frequently?
Works within your budget
Have a solid understanding of the local marketplace
Is willing to provide advice on how to make changes to your portfolio
Will you be able to set realistic expectations

What is retirement plan?

Retirement planning is an essential part of financial planning. It allows you to plan for your future and ensures that you can live comfortably in retirement.

Retirement planning is about looking at the many options available to one, such as investing in stocks and bonds, life insurance and tax-avantaged accounts.

What is risk management and investment management?

Risk management refers to the process of managing risk by evaluating possible losses and taking the appropriate steps to reduce those losses. It involves monitoring and controlling risk.

Any investment strategy must incorporate risk management. Risk management has two goals: to minimize the risk of losing investments and maximize the return.

These are the main elements of risk-management

Identifying the risk factors
Monitoring and measuring risk
Controlling the risk
Manage the risk

What is wealth management?

Wealth Management is the practice of managing money for individuals, families, and businesses. It encompasses all aspects financial planning such as investing, insurance and tax.

How to choose an investment advisor

It is very similar to choosing a financial advisor. Consider experience and fees.

Experience refers to the number of years the advisor has been working in the industry.

Fees are the price of the service. It is important to compare the costs with the potential return.

It's crucial to find a qualified advisor who is able to understand your situation and recommend a package that will work for you.

Do I need to pay for Retirement Planning?

No. No. We offer FREE consultations so we can show you what's possible, and then you can decide if you'd like to pursue our services.

Statistics

These rates generally reside somewhere around 1% of AUM annually, though rates usually drop as you invest more with the firm. (yahoo.com)
US resident who opens a new IBKR Pro individual or joint account receives a 0.25% rate reduction on margin loans. (nerdwallet.com)
As of 2020, it is estimated that the wealth management industry had an AUM of upwards of $112 trillion globally. (investopedia.com)
Newer, fully-automated Roboadvisor platforms intended as wealth management tools for ordinary individuals often charge far less than 1% per year of AUM and come with low minimum account balances to get started. (investopedia.com)