personal finances

Working with a fee-only financial advisor

By Lisa Copely 31 March, 2023 3 mins read

There are a few things you should keep in mind when working with a fee only financial advisor. First, consider the cost of working as a fee-only advisor. Fee-only financial advisors may charge a flat fee, an hourly rate, or a percentage for managing assets. Although it may be more expensive to work with a fee only financial advisor, basic advice may not cost as much.

NAPFA is a list of fee-only financial professionals

Fee-only financial advisors are professionals that have chosen to join NAPFA. This association promotes professional competence and client-focused planning. The Society of Independent Financial Advisors formed the group in 1982 to address ethical concerns associated with accepting a commission. NAPFA was founded by the group of individuals who recognized that putting clients’ interests first could lead to conflicts with their own financial goals.

NAPFA is a database of fee-only financial advisers. It includes many financial professionals who are licensed to work in America. The NAPFA sets high standards for its members. It requires them to complete continuing education and submit financial plans for peer evaluation. In addition, NAPFA requires its members to work only in fee-only structures, which minimizes conflicts of interest and ensures that the financial planners are acting in their clients' best interests.

Fee-only financial advisor: Costs

Fee-only financial advisers charge a flat fee that can reach as high as $10,000 per annum. Some advisors charge a percentage for assets managed. Others require a monthly, or an annual subscription fee. These subscription fees can vary in cost, but generally there is a one-time charge for the initial set-up and a monthly fee to continue support. Some fee-only financial advisors provide limited services, such as annual meetings or reviews, or only offer 1:1 time with the advisor.

Fee-only financial advisers may charge a flat rate for an initial financial plan, but their fees can range from $2,500 to $12,000 depending on experience and services. In the first year, an initial comprehensive financial plan may cost $1,500 to $3,000, with a timed or retainer rate of $150 to $400 per hour or $1,500 to $7,500 per year. In addition, fee-only advisors may charge a percentage of assets managed, which can range from 1% to 2%.

Fee-only financial advisors can earn professional designations

Financial certifications, also known as professional designations in financial services, are evidence of an individual's expertise and knowledge. Many require extensive exams and hundreds of hours of training. Financial advisors with professional designations can differentiate themselves from those without such credentials. Medical school credentials, for example, show that a professional has been through written tests and been thoroughly vetted at an educational institution. Charles Sizemore, Chief Investment Officer at Dallas-based Sizemore Capital Management (CFP) and CLU are the gold standard for life assurance agents.

CFP's are the most versatile and knowledgeable types of financial advisors. CFP's can offer advice on virtually any financial matter, from taxation to retirement planning. CFP's are required to follow strict fiduciary standards. This means that they will always put their clients' best interests first. Applicants must complete a demanding course load, pass a rigorous exam, and have at least three years of experience in financial planning before they can take the test.

FAQ

How to Begin Your Search for A Wealth Management Service

When searching for a wealth management service, look for one that meets the following criteria:

Has a proven track record
Is it based locally
Consultations are free
Offers support throughout the year
Is there a clear fee structure
Good reputation
It is simple to contact
Support available 24/7
Offers a range of products
Low charges
Does not charge hidden fees
Doesn't require large upfront deposits
Have a plan for your finances
Transparent approach to managing money
This makes it easy to ask questions
You have a deep understanding of your current situation
Learn about your goals and targets
Is open to regular collaboration
Works within your budget
A good knowledge of the local market
You are available to receive advice regarding how to change your portfolio
Are you willing to set realistic expectations?

Who Should Use a Wealth Management System?

Anyone who is looking to build wealth needs to be aware of the potential risks.

For those who aren't familiar with investing, the idea of risk might be confusing. As such, they could lose money due to poor investment choices.

Even those who have already been wealthy, the same applies. They may think they have enough money in their pockets to last them a lifetime. They could end up losing everything if they don't pay attention.

Everyone must take into account their individual circumstances before making a decision about whether to hire a wealth manager.

How old should I start wealth management?

The best time to start Wealth Management is when you are young enough to enjoy the fruits of your labor but not too young to have lost touch with reality.

The sooner that you start investing, you'll be able to make more money over the course your entire life.

If you're planning on having children, you might also consider starting your journey early.

You could find yourself living off savings for your whole life if it is too late in life.

Is it worth hiring a wealth manager

A wealth management service will help you make smarter decisions about where to invest your money. You should also be able to get advice on which types of investments would work best for you. This will give you all the information that you need to make an educated decision.

There are many factors you need to consider before hiring a wealth manger. Is the person you are considering using trustworthy? Can they react quickly if things go wrong? Can they explain what they're doing in plain English?

What is wealth management?

Wealth Management involves the practice of managing money on behalf of individuals, families, or businesses. It covers all aspects of financial planning including investment, insurance, tax and estate planning, retirement planning, protection, liquidity and risk management.

Who can help with my retirement planning

Many people consider retirement planning to be a difficult financial decision. It's more than just saving for yourself. You also have to make sure that you have enough money in your retirement fund to support your family.

It is important to remember that you can calculate how much to save based on where you are in your life.

For example, if you're married, then you'll need to take into account any joint savings as well as provide for your own personal spending requirements. Singles may find it helpful to consider how much money you would like to spend each month on yourself and then use that figure to determine how much to save.

You could set up a regular, monthly contribution to your pension plan if you're currently employed. Consider investing in shares and other investments that will give you long-term growth.

Contact a financial advisor to learn more or consult a wealth manager.

Statistics

US resident who opens a new IBKR Pro individual or joint account receives a 0.25% rate reduction on margin loans. (nerdwallet.com)
These rates generally reside somewhere around 1% of AUM annually, though rates usually drop as you invest more with the firm. (yahoo.com)
According to Indeed, the average salary for a wealth manager in the United States in 2022 was $79,395.6 (investopedia.com)
Newer, fully-automated Roboadvisor platforms intended as wealth management tools for ordinary individuals often charge far less than 1% per year of AUM and come with low minimum account balances to get started. (investopedia.com)