Since this issue of CBN is focused on financial planners and stockbrokers, I want to inform you of a service that many people do not know about…
Hourly, As-needed Fee-only Financial Planning. Hourly, fee-only financial planners provide affordable access to professional and objective financial advice for people regardless of their net worth. Hourly, fee-only advisors are compensated for the amount of time they spend to evaluate your situation and prepare the investment recommendations.
A fee-only financial planner is not compensated for the sale of a particular mutual fund or investment product. Because the hourly, fee-only financial planner is not paid commissions, they can recommend a comprehensive investment portfolio that is right for you (which may include real estate holdings). For example, if you have modest investments, or most of your assets are in real estate, it may be difficult to get the attention of a broker or investment advisor who makes money on investing in securities such as stocks and bonds.
The nature of that business model is that they need to spend time on clients that have money to invest “with them”. The hourly fee-only planner will have no such conflicts. In the hourly model you pay the advisor what they are worth to you rather than with the balance of the industry where you pay what you are worth to the advisor. Hourly, fee-only Certified Financial Planners (CFPs) are an important resource to consider when making financial decisions or creating a plan for financial security. Here are a few specific reasons:
- With regard to investments, hourly, as-needed financial planning separates the advice cost from the transaction cost, thereby providing more complete disclosure, and more flexibility for the client.
- The approach to investing is holistic, and encourages consideration of particular investment decisions in light of:
* Its relation to your other investments and your overall financial goals
* Its effect on your tax situation
- Evaluation need not be limited only to a particular set of assets under management or in a particular account, and assets in a particular account do not need to be considered in isolation.
- Hourly, as-needed fee-only financial planninSg makes it easier to evaluate your overall financial situation in an objective manner, including things such as cash flow, insurance planning, college or other goals planning, assessing readiness for retirement, and estate planning. In contrast, transaction-based approaches can lead to neglect of planning areas that are not associated with a particular transaction or product.
- The products recommended in a transaction-based approach may be those that generate the largest commission, rather than those that are best for the client.
Some “hourly” planners also invest money and sell insurance. The sale of products may cloud the advisor’s objectivity. Additionally, if the advisor makes money through fees for investing your money, they are in a way competing with the other ways you could invest your money. For example, they may be reluctant to support your idea of paying off your mortgage or buying real estate. Be sure the hourly planner you choose does not sell product and is not paid in any way to invest your money for you.
This ensures they are working solely on your behalf. If you would like to find an hourly CFP ® in your area, a good resource is The Garrett Planning Network, a nationwide network of professional, Fee-Only financial advisors. Founded by nationally recognized Certified Financial Planner™, Sheryl Garrett, GPN members are dedicated to providing competent, unbiased Fee-Only financial advice to people from all walks of life.
Check out their website for more information: www.garrettplanningnetwork.com. Margaret M. Martin is an Assistant Professor of Business at Central Oregon Community College. She can be contacted by email at firstname.lastname@example.org or 383-7769. Ann Laferriere, CFP®, is a principal at Griffon Financial Planning, LLC. She can be contacted at 317-1617 or email@example.com.