Financial planner

Terms

Fee-only financial fiduciary

NAPFA - What is a fee-only financial planning

Certified Financial Planner (CFP®s)

Fiduciary: https://www.investopedia.com/terms/f/fiduciary.asp A fiduciary is a person or organization that acts on behalf of another person or persons, putting their clients’ interests ahead of their own, with a duty to preserve good faith and trust.

Registered Investment Advisors (RIAs) and certified financial planners (CFP®s) both swear to act as fiduciaries, for example.

https://www.forbes.com/advisor/investing/financial-advisor/fee-only-financial-planner/

Many professional financial planning associations offer free databases to make the process of finding a financial advisor easier. These include:

https://www.approachfp.com/how-fee-only-financial-planners-work/

A 2020 study from Kitces finds that the average hourly fee for a fee-only advisor is $250 in 2020 (up from$193), and the median fee is $2,500 for a one-time plan. The range goes as high as $12,000 in some cases. But advisors use a variety of fee structures, including billing asset management fees to accounts, typically at 1% for the first $1 million under management. Another study shows a median fee of $2,500 to $3,000 for an initial financial plan. Other approaches like retainers or fees based on net worth and income are increasingly popular. Advisors might receive automatic monthly payments from your bank account, or they might review your financials with you every few years to determine if a fee adjustment is warranted.

All that said, fees are all over the board. Some advisors charge flat fees in excess of $10,000 to complete projects or build a financial plan, although they typically have specialized expertise. Advisors might set pricing based on complexity, so your financial circumstances and the types of analysis you receive will determine your ultimate cost of working with an advisor.

According to the Kitces study, planners bill 10 hours (median) to complete a plan, but your planning time may vary, depending on several factors.

There may be some costs involved if you switch to a fee-only advisor from a different advisor, but you could still come out ahead in the long run.

Where to Find a Fee-Only Financial Planner

If you’re interested in working with a fee-only fiduciary, it’s easy to find one. You might have several in your area, and some advisors work virtually — with clients nationwide (unless any state or federal rules would prevent working together). An excellent place to start is the XY Planning Network search tool, which lists only fee-only financial planners who are also Certified Financial Planner (CFP®) professionals. Full disclosure: I’m a dues-paying member, and my profile appears there. Other resources include the CFP® Board (which includes both commissioned and fee-only planners) and NAPFA.org.

Questions to ask: As you research potential advisors, interview them to learn how they work and what to expect. A few ideas to get you started include:

What’s your background and experience working with clients like me?
Are you a fiduciary at all times, with all clients?
How do I pay for your services?
How are you compensated, above and beyond the fees I pay you directly?
What topics can we talk about?
Can you provide advice on things besides investments and just charge fees for advice?
Do I need to transfer assets to you or invest money?
What will I find when I look up your regulatory background and disciplinary history (through BrokerCheck or IARD)?