What Is a Fee-Only Financial Planner?
A fee-only financial planner is a professional who helps you organize and reach your long-term financial goals. They create a personalized plan for you based on your current financial situation and future goals.
Fee-only financial planners differ from other financial advisors in that they only earn money from the fees they charge their clients.
They do not earn commissions from selling financial products like insurance or investments. This means they are not incentivized to sell you products that may not be in your best interest.
Pros and Cons of Fee-Only Financial Planning
There are pros and cons to working with a fee-only financial planner.
Pros:
- You can be confident that your fee-only financial planner is acting in your best interest since they are not motivated by commissions.
- They can provide unbiased advice on various financial topics, including investments, insurance, taxes, and retirement planning.
- Fee-only financial planners typically have more experience and education than other financial advisors.
Cons:
- Fee-only financial planners may charge higher fees than other financial advisors.
- They may not be able to provide as comprehensive of service if they do not earn commissions from selling financial products.
Fee-Only Financial Planner Rates
Fee-only financial planners typically charge by the hour, ranging from $100 to $300 per hour. Some may also charge a flat fee or a percentage of assets under management.
Shopping around and comparing rates is important when searching for a fee-only financial planner. Be sure to ask about all fees upfront so there are no surprises later.
Fee-Only vs Commission-Based Financial Planners
As you are searching for a financial planner, you will likely come across both fee-only and commission-based planners.
Commission-based financial planners earn money from their commissions on the products they sell to their clients. This means that they may have a conflict of interest when giving advice.
Fee-only financial planners, on the other hand, do not earn commissions. They are only paid by the fees they charge their clients. This means that they are more likely to give unbiased advice.
How to Find the Right Fee-Only Financial Planner for You
When searching for a fee-only financial planner, you should keep a few things in mind.
First, find someone who is a Certified Financial Planner (CFP). This designation means they have met certain educational and ethical standards the financial planning industry set.
Finding a fee-only financial planner who charges an hourly or flat fee is also important. Steer clear of planners who charge a commission, as they may have a conflict of interest.
Finally, be sure to choose a financial planner with whom you feel comfortable. This is someone who you will be sharing personal financial information with, so you must trust and feel comfortable with them.
The Bottom Line
A fee-only financial planner is a professional who helps you organize and reach your long-term financial goals. They create a personalized plan for you based on your current financial situation and future goals.
Fee-only financial planners differ from other financial advisors in that they only earn money from the fees they charge their clients. They do not earn commissions from selling financial products like insurance or investments.
There are both pros and cons to working with a fee-only financial planner.
Some pros include that you can be confident they are acting in your best interest, and they typically have more experience and education.
Some of the cons include that they may charge higher fees and may not be able to provide as comprehensive of service.
FAQs
1. How much do fee-only financial planners typically charge?
Fee-only financial planners usually charge by the hour, with rates ranging from $100 to $300 per hour. Some may also charge a flat fee or a percentage of assets under management.
2. What is the difference between a fee-only and commission-based financial planner?
Commission-based financial planners earn money from their commissions on the products they sell to their clients. This means that they may have a conflict of interest when giving advice.
Fee-only financial planners, on the other hand, do not earn commissions. They are only paid by the fees they charge their clients. This means that they are more likely to give unbiased advice.
3. How do I find the right fee-only financial planner for me?
When searching for a fee-only financial planner, be sure to find someone who is a Certified Financial Planner (CFP). This designation means they have met specific educational and ethical standards the financial planning industry set.
Finding a fee-only financial planner who charges an hourly rate or a flat fee is also important. Steer clear of planners who charge a commission, as they may have a conflict of interest.
Finally, be sure to choose a financial planner with whom you feel comfortable. This is someone who you will be sharing personal financial information with, so you must trust and feel comfortable with them.
4. What are the pros of working with a fee-only financial planner?
Some pros of working with a fee-only financial planner include that you can be confident they are acting in your best interest and typically have more experience and education.
5. What are the cons of working with a fee-only financial planner?
Some of the cons of working with a fee-only financial planner include that they may charge higher fees and may not be able to provide as comprehensive of service.
