It’s now possible to put a price on fee-for-service financial planning advice. If you want a comprehensive financial plan, with at least a few sessions with a fully accredited planner and a custom written report, expect to pay between $1,500 and $4,000 or more.
A most welcome change has taken place in the financial planning industry in recent years. There are over 100 planners now working with clients on a fee-for-service basis, which means you pay a fixed hourly or flat rate. Most of these planners don’t deal with investments – they just do financial planning and, in some cases, advise clients on improving their financial health.
Fee-for-service planning is transparent and conflict-free because planners are paid directly by clients and not through fees or commissions generated from selling investments or managing portfolios. Increasingly, this transparency extends to the amount of fees customers should expect to pay.
Check many planners’ websites and you’ll find a link that says something like ‘fees’ or ‘pricing’ or ‘services’ – click on that to get an idea of what they charge for their services.
Natasha Knox of Alaphia Financial Wellness has a calculator on her website — look under “Pricing” — that helps potential customers get an idea of how much a plan will cost. Money Coaches Canada lists services costing $1,500 to $10,000 on its website, while Spring Plans lists services $1,800 to $8,500 and above.
The New School of Finance charges between $295 and $495 for a one-on-one financial session covering topics such as debt repayment, home down payment planning, and budgeting for having a child. For what he calls a typical financial planning engagement, Robb Engen charges $1,500 for one person and $1,800 for couples. You may know Mr. Engen from his personal finance blog, Boomer & Echo.
I recently asked Planners on LinkedIn to comment on a question from a reader who was quoted $4,000 for retirement and investment planning and wanted to know if that was the average cost. The consensus was that this was within the typical pricing zone for plans, with higher costs for customers who, for example, own businesses, have family trusts or investment property portfolios.
The wide variation in prices suggests two things: that customers need to consider value in terms of services as well as cost, and that pricing is flexible enough to meet each customer’s needs and means.
Fee-for-service planning is ideal for people who manage their own investments or who have an advisor who strictly manages their portfolio. The typical fee-for-service planner is not allowed to talk about specific investments, which means investment conversations are limited to issues such as risk tolerance and the optimal mix of stocks, d bonds and cash.
Karin Mizgala, co-founder and managing director of Money Coaches, says her firm’s planners strive to answer two questions for clients: Will I be okay in the future and what should I do to be well?
“In theory, this is all easy,” she said. “You balance your checkbook, you put money aside, you find decent investments. But that’s not how life is. People don’t want to talk about any of this – they point fingers at spouses, they don’t know why they’re in debt, they don’t want to look at that stuff. If you are a planner, you are an advisor as well as doing the calculations. »
Money Coaches has been doing paid planning for about 10 years and charges an average of $4,000 for a full plan, Ms. Mizgala said. This amount has increased a bit over the years as the company’s coaches have realized the amount of work involved in planning and the number of hours required.
Money Coaches planners spend an average of about 35 working hours on a plan, including several meetings with the client and time spent working on the numbers. The company’s website lists 14 planners with the definitive designation of Certified Financial Planner (CFP) and one who is a Qualified Associate Financial Planner (QAFP). The QAFP indicates that someone can provide planning for less complex needs.
Typical Money Coaches clients have household incomes of $150,000 to $200,000 and questions about retirement, taxes, debt and estate planning, Ms. Mizgala said. Clients receive a 15-20 page written plan, along with worksheets and a 1-2 page action plan that summarizes the steps to follow.
Ms. Knox, CFP and owner of Alaphia, based in New Westminster, British Columbia, said her base rate for a comprehensive plan is $2,000. The cost increases from there depending on the complexity, which can mean cross-border issues, planning for a disabled person, blended families, multiple properties and uneven or seasonal sources of income.
If you are interested in making a plan, do not hesitate to contact the planners to get a quick idea of rates and services according to your needs. Ms. Knox offers a free consultation — she works virtually — then presents a proposal that outlines services and costs.
The financial industry has come a long way in fee disclosure, but tension over cost transparency persists even in the world of service fee planning.
“There are two schools of thought,” Ms Knox said. “One says, don’t list your prices because then people have no context. They haven’t met you and they don’t know what value you offer. And then there’s the other school of thought, the one I subscribe to, which is to be transparent about pricing. It’s one of my core values.
Fee-for-service planning has obvious appeal for baby boomers and Gen Xers contemplating retirement and wondering if they’re on the right path to financial well-being. But young people are also beginning to take an interest in it.
“The youngest client I took on was 19,” said Daniel Evans, a CFP at Money Coaches in Vancouver. “It goes up from there to around 35 or 36. I find that group, millennials, to be my forte when it comes to planning based on advice alone.”
Mr. Evans said his fees start between $2,000 and $2,500 for a planning process that includes several meetings. That 19-year-old client? He was a high school graduate who received advice on managing his income from work so he could start investing. “Really, it was about being a coach in his investment journey.”
A quick introduction to fee-for-service financial planning
What is that? Pay a fixed or hourly fee for a financial consultation or a comprehensive written plan.
What makes it unique? Most financial advice is provided by advisers who are compensated in the form of fees and commissions on the sale of investments or portfolio management; fee-for-service planning is a transparent service, similar to hiring an accountant or a lawyer.
Where can I find a paid planner? Try this directory created by personal finance blogger John Robertson.
Do planners work virtually, such as via Zoom or Skype? This is the typical way planners and clients have interacted since the start of the pandemic. You don’t have to be in the same city as your planner
What should I ask for when talking to a planner I’m considering – credentials and what else? You can find suggested questions here.
How much does it cost? Hourly rates generally range from $200 to $350 and up; financial plans generally range from $1,500 to $4,000, but can cost more in complex cases.
Should I compare by price? No – compare the price and services with the appraisal value.
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