Why Fee Based?
Here are FOUR reasons why fee-based financial planning:
1. No Sales!
Fee-based financial planners provide expert advice and assistance and are not motivated to sell you any financial products. We know that some planners offer “free” financial plans. We do not. But we also know that there is no such thing as a free lunch—there is a cost for that “free” plan and you will likely be very surprised what the real cost is to you.
2. We Work For You
A Fee-based financial planner has a moral, ethical and fiduciary responsibility to work solely on your behalf without any conflicts of interest.
3. Planning for Anyone, Regardless of Your Wealth
A flat fee or hourly rate financial planner works with clients interested in assessing and improving their financial situation regardless of how much money you currently have.
4. Planning for What You Need, When You Need It
A fee for service planner can work with you to prepare a full and comprehensive financial plan or can address very specific issues regarding your investments, debts, education funding, estate planning, insurance or any topic of your choice on an hourly or project fee basis. In short, there is no “one size fits all” solution.
“Ask how the advisor is compensated. Orman recommends someone who charges a flat or hourly rate (in other words – a Fee-Only planner)… How you pay someone to give you advice or manage your investments speaks volumes about whether advice best serves the advisor OR you. If product sales are mixed together with advice, the potential for conflicts of interest go UP and objectivity may be compromised.”
“With fee for service planners, there is no conflict of interest because the adviser will charge … an hourly fee. The bottom line: Financial professionals make their money through various compensation models, so make sure you ask about any real or perceived conflicts of interest and know exactly how your advisor is being compensated.”
“Understand the compensation. The planner should be up front about this. Commission-based planners are paid for the financial products they sell. Fee for service planners charge a flat fee for all services or a fixed advisory fee plus a percentage annual fee or flat retainer to manage your money. Ask specifically if the planner will provide services with the “duty of care of a fiduciary,” meaning they’re obliged to base their recommendations on your best interests and to fully disclose any conflicts of interest. If he or she can’t answer affirmatively, find another planner.”
“Consider the planner’s pay structure. You typically want to avoid commission-based advisers. Planners who work on commission may have less than altruistic incentives to push a certain life insurance package or mutual fund if they’re getting a cut of that revenue.”
Wall Street Journal