financial planner

Working with a Fee-Only Financial Advisor

By Lisa Copely 25 September, 2023 3 mins read

financial planning in financial management

If you are considering working with a fee-only financial advisor, there are a few things to keep in mind before hiring one. First, you need to know the cost involved in working with a fee -only financial advisor. Fee-only advisors charge a flat rate, an hourly rate or a percentage from the assets under their management. Working with a fee-only advisor might be more expensive, but it is possible to get basic advice for a lower fee.

NAPFA is a directory of fee-only financial advisers

Fee-Only advisors are financial professionals who have elected to join NAPFA. NAPFA is an association that promotes professionalism and client-focused finances. It has existed since 1982 when the Society of Independent Financial Advisors gathered in Atlanta to discuss ethics and the dilemmas of accepting commissions. NAPFA was founded by the group of individuals who recognized that putting clients’ interests first could lead to conflicts with their own financial goals.

A NAPFA database of fee only financial advisors includes many financial planners who are qualified to work in the US. The NAPFA sets high standards for its members. It requires them to complete continuing education and submit financial plans for peer evaluation. NAPFA demands that members only work in fee-only models, which reduces conflicts of interest and ensures that financial advisors are acting in clients' best interests.

The cost of working with a fee only financial advisor

Fee-only financial advisors typically charge a flat fee, which can be as much as $10,000 per year. While some advisors charge only a percentage of the assets managed by them, others may require that their services be paid a monthly subscription fee. There may be a fee for these subscriptions services that is different, but generally a onetime fee is required for the initial setup period and a monthly service fee for ongoing support. Some fee-only financial advisers only provide limited services, such annual reviews or meetings, or offer one-on-1 time.

Fee-only financial planners may charge an upfront fee, but fees can vary depending on their experience and the services they provide. A comprehensive financial plan for the first year can cost from $1,500-$3,000. There may be a retainer fee of $150-400 per hour, $1,500-$7,500 per annum, and a timed rate of $150-400 per hour. In addition, fee-only advisors may charge a percentage of assets managed, which can range from 1% to 2%.

Professional designations earned by fee-only financial advisors

Financial certifications, also known as professional designations in financial services, are evidence of an individual's expertise and knowledge. These certifications require hundreds of hours in coursework and extensive exams. Financial advisors who hold professional designations can be distinguished from those without them. To illustrate, medical school credentials are evidence that a person has passed written tests and been thoroughly reviewed by an educational institution. Charles Sizemore, chief investment officer of Dallas-based Sizemore Capital Management, is a certified financial planner (CFP) and CLU, which are the gold standard for life insurance agents.

Chartered Financial Consultants (CFP) are among the most knowledgeable and versatile types of financial advisors. CFP's can offer advice on virtually any financial matter, from taxation to retirement planning. CFPs must also adhere to strict fiduciary standards. Clients' interests are always considered first. Before they can take the exam, applicants must have completed a challenging course load and passed a rigorous exam.

FAQ

Who Should Use a Wealth Management System?

Everybody who desires to build wealth must be aware of the risks.

New investors might not grasp the concept of risk. Poor investment decisions can lead to financial loss.

It's the same for those already wealthy. They may think they have enough money in their pockets to last them a lifetime. This is not always true and they may lose everything if it's not.

Each person's personal circumstances should be considered when deciding whether to hire a wealth management company.

What is estate planning?

Estate Planning is the process of preparing for death by creating an estate plan which includes documents such as wills, trusts, powers of attorney, health care directives, etc. These documents will ensure that your assets are managed after your death.

How to Beat Inflation by Savings

Inflation refers to the increase in prices for goods and services caused by increases in demand and decreases of supply. Since the Industrial Revolution people have had to start saving money, it has been a problem. The government manages inflation by increasing interest rates and printing more currency (inflation). You don't need to save money to beat inflation.

You can, for example, invest in foreign markets that don't have as much inflation. You can also invest in precious metals. Two examples of "real investments" are gold and silver, whose prices rise regardless of the dollar's decline. Investors who are concerned about inflation are also able to benefit from precious metals.

Statistics

US resident who opens a new IBKR Pro individual or joint account receives a 0.25% rate reduction on margin loans. (nerdwallet.com)
According to a 2017 study, the average rate of return for real estate over a roughly 150-year period was around eight percent. (fortunebuilders.com)
As of 2020, it is estimated that the wealth management industry had an AUM of upwards of $112 trillion globally. (investopedia.com)
These rates generally reside somewhere around 1% of AUM annually, though rates usually drop as you invest more with the firm. (yahoo.com)