- More advisors are getting creative with their fees so that they can offer their services to people who normally couldn't afford it.
- That includes charging a monthly subscription or billing hourly for financial planning.
- Meanwhile, others are providing group coaching and courses.
There's a big misconception that financial planning is only for the wealthy. The truth, however, is that financial planning is a path for anyone to actually gain wealth.
The objective of financial planning is to get people to their desired life goals. It doesn't matter when you start or how much money you have, experts say. All that matters is that you get to those final goals.
Traditionally, many advisors charge you a percentage – say, 1% – of your assets under management with them, and so if you don't have $250,000 or $500,000 to fork over, you may not appeal to them.
That's changing. A growing number of advisors bill in other ways that allow more people to access their services.
"You don't need to be rich to work with a financial planner," said Justin Nichols, a Manhattan, Kansas-based certified financial planner and director of operations at the Garrett Planning Network.
For example, the 200-plus advisors in the Garrett Planning Network offer the option of paying by the hour for financial planning. "Our advisors agree to work with a broad group of clients, not just the wealthy," Nichols said.
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What kind of services can people get by the hour? The list is long: budgeting, debt management, insurance and estate planning, saving and investing help, Social Security strategizing and charitable giving guidance.
And just because you pay an advisor hourly doesn't mean you can't have a long-term relationship with them: Around half of clients who do so in the Garrett Planning Network return to their advisor for reviews and financial check-ups, Nichols added.
The average hourly rate charged by an advisor in the Network is $215, but the fees can range from $150 to more than $500, Nichols said. Some clients will require just three hours of help, others 12.
"Maybe a client doesn't need or isn't willing to pay for an entire broad-based financial plan, but they're really just wanting to focus on a few urgent and important areas of their personal financial life," Nichols said. "They can more easily get that focused planning by simply paying by the hour."
Meanwhile, other advisors charge a monthly or yearly subscription to be able to see clients without huge bank account balances.
Eric Roberge, a CFP and the founder of Beyond Your Hammock in Boston, bills some of his clients $333 a month. (The program is $4,000 a year, "broken down into monthly payments to make it easier for clients to manage in their cash flow," Roberge said.)
"We reach people that traditional financial advisors tend to ignore," Roberge said. Those clients are often just starting to get serious about their goals, he said, "and may be investing outside of retirement accounts for the first time, or dealing with complexities like equity compensation."
For that $4,000 annual cost, clients can meet with a personal financial planner up to five times in their first year, and then two to three times in the following years, Roberge said.
Jason Howell, a CFP and the president of Jason Howell Company in Vienna, Virginia, also gives clients the option of paying a flat annual fee – $5,000 for the first six months, and then $5,000 a year thereafter.
It's often the moves made at the start of one's financial journey, even if they haven't accumulated a lot of wealth at that point yet, that will determine how the rest unfolds, Howell said.
"The needs of younger professionals often focus on building their first emergency fund, combining finances with a significant other, taking full advantage of employer sponsored retirement plans and beginning a life insurance program while they are young, healthy and skinny," he said.
Meg Bartlett, a CFP and the founder of Flow Financial Planning with offices in Washington, California and New York, said charging clients a flat fee – her median is $6,000 a year – instead of a percentage of their assets under management enables her to work with those who may not have a lot salted away yet but are high earners. (Her average client makes $140,000 or more a year.)
"If you can create a business that can profitably serve more people, you'll find it easier to find clients," Bartlett said.
The more selfless motivation?
"We advisors can help people so much and so easily with our accumulated knowledge and expertise," Bartlett said. "Why do only rich people get to have that help?"
In fact, even hourly and flat fees will be too expensive for many, she said. For those, Bartlett recommends they read books like "I Will Teach you to Be Rich" by Ramit Sethi and "How a Second Grader Beats Wall Street" by Allan Roth.
Meanwhile, some advisors, recognizing their fees are too high for most people, provide group coaching and courses, she added.
"It's not going to be as powerful as having a one-on-one relationship with an advisor, but it's going to be way less expensive," Bartlett said.
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