If you’re thinking about the future and your financial goals, and are starting to feel anxious about managing your wealth on your own, it may be time to hire a financial planner. As you start your search for a financial planner who meets your needs, it will quickly become apparent that there are many different types of advisors out there — and not all of them are created equal.
It is best to have someone you can trust when you’re putting your money, security, and financial goals in their hands. It’s also essential to understand how your financial advisor is compensated to help avoid any conflicts of interest, and to ensure your goals are the priority.
In general, advisors are compensated in one of three ways:
- Fee based (fees paid by the clients and commission from product sales)
- Fee only (no commissions)
Working with a fee-only advisor helps to eliminate conflicts of interest, and often means you’ll receive elevated service.
Before you make a decision, take a look at your options, including using a fee-only financial planner. Let’s dig into why a fee-only financial planner is the best fit for your financial planning needs.
- Holistic Financial Planning
Fee-only financial planners consider your overall financial picture rather than just trying to sell you financial products. This approach is vital, because you want to know you’re making the right decisions for your financial future.
A commission-based broker makes money selling you stocks, bonds, annuities, and mutual funds. Some of these choices may not be right for your unique needs. Although they’re “suitable” and could help you reach your long term goals, they aren’t tailored to your risk tolerance and retirement timeline.
When you work with a fee-only planner, you’re more likely to receive a financial plan that is unique to your financial needs. These financial plans may include the following:
- Income and expense planning
- Advanced and proactive tax planning
- College and education planning for children and grandchildren
- Investment planning and management
- Estate planning
- Risk management and insurance planning
Fee-only financial planners aren’t incentivized to sell financial products. Instead, they are more likely to offer tailor-made financial planning that aligns with your financial goals.
- Comprehensive Financial Advice
A fee-only planner can help you make sound financial choices for your future. They aren’t in the business of selling certain products. They are there to offer the best options for your particular needs.
Without a bonus or commission incentive, a fee-only planner can focus on giving you sound financial advice. You can feel confident they’re looking out for your best interests rather than pitching products and hoping for a commission.
Because a fee-only advisor isn’t associated with a specific product, they can offer the best investment options on the market. You can be sure you’re getting sound and unbiased financial advice. They’ll leave no stone unturned when building a financial plan that’s uniquely fit to your short and long term goals, values, and legacy wishes.
- Fee Transparency
With a fee-only planner, you are the one paying the advisor. So, you are specifically aware of what services you’re getting, and how much you’re paying for them.
With commission-based planners, the client doesn’t always know what they’re paying for. The financial advisor’s compensation is often layered within the fees of the costs for a financial product. In fact, many commission-based planners seem like they’re less expensive on the surface, because they make all of their money through sales commissions. This means that, essentially, you’re partnering with a sales professional – not an advisor.
Fee transparency also means no “sneaky” or hidden fees. A fee-only planner will always be upfront about how they charge for their services, and you won’t feel hoodwinked down the line when you’re hit with sudden and unexpected fees.
- No Commissions
An advisor who receives commissions will always have a conflict of interest — period. Even if they’re a good person and generally have your best interest at heart, there’s no telling what will happen when the chips are down and they have an opportunity to make a large commission on a sale that is suitable, but not the best possible option.
You may not need an expensive life insurance product or disability insurance. You don’t want a financial planner that pushes products that aren’t relevant to your life or needs.
Fee-only planners don’t receive extra money for recommending products you don’t need. Instead, they work for a flat fee or flat percentage paid by you.
Doing so removes the conflict of interest. The advisor’s advice revolves around you and what’s best for your financial future.
- Advice When You Need It
With a fee-only planner, advice is the focus. You’re paying for expert financial advice. A fee-only planner’s focus is on you, not selling products for a commission check.
When you meet with your advisor, you’re looking for advice that will give you peace of mind or empower you to make life decisions knowing that you’ll be financially secure. It’s disheartening to work with a financial planner who’s always giving you a sales pitch when you’re seeking genuine advice.
When a fee-only planner recommends a product, you know they aren’t receiving a commission for selling it. Instead, they are looking out for you and suggesting something that will benefit you financially.
When choosing a financial planner, make sure their goals revolve around giving you the best advice and developing a comprehensive financial plan just for you.
- Acts as a Fiduciary
In most cases, a fee-only financial planner is a fiduciary. That means they must act in the best interest of their client at all times.
They are required by law to put the client’s interests first. In comparison, non-fiduciaries are required to provide “suitable” recommendations for their clients. Unfortunately, these recommendations are not always in the client’s best interest.
You don’t want “suitable” financial recommendations. You want the best and most specific advice for your financial future.
As you search for the best financial planner, make sure they are a fiduciary advisor. These financial professionals are held to a higher legal standard than a traditional broker.
There is more transparency and fewer conflicts of interest in the client-advisor relationship with a fiduciary in your corner. Anyone can claim they are offering unbiased advice. But beware. Before choosing a financial advisor, ask them if they’re a fiduciary.
Working with a fiduciary brings peace of mind knowing they have your financial interests at heart. Not to mention being held to that higher standard. That’s the type of extra assurance that can help you sleep more soundly at night.
- Goals Beyond Investing
A fee-only planner has the skills to help you make lucrative investments for your financial future. But, they consider more than just investments when putting together a comprehensive financial plan.
They are an excellent financial professional to turn to for help with all aspects of your financial goals. Their primary loyalty is to you, the client.
They take a holistic approach to financial planning and have experience with non-investment issues such as:
- Goal setting
- Getting out of debt
- Paying for college
- Insurance needs
- Saving for retirement
- Purchasing a new home
- Starting or ending a business
- Charitable giving
- Wealth transfer
- Wealth protection
If you prefer to handle all of your financial investments on your own, it still makes sense to seek the expertise of a fee-only financial planner. They may be able to provide advice and insight to help you reach your financial goals, and offer you the information you need to successfully DIY your portfolio management.
- Client-Centered Relationship
Having a good and trusting relationship with your financial planner is critical. You’re putting your money in their hands and must feel comfortable with them taking the wheel.
A fee-only financial planner’s job is to concentrate on your long-term financial success. They can help with financial advice for multiple areas of your life.
With a simple payment structure, you pay for what you need when you need it. When your financial future is at stake, you want to know your finances are in reliable hands.
In a client-centered relationship, you don’t have to second guess your financial planner or worry that they’re putting their commissions above your financial success. Their primary goal is to help you, their client, achieve your goals — financial and otherwise.
- Variety of Product Options
A financial planner who works for a large financial services firm is often encouraged to push that company’s products. Unfortunately, they aren’t always the best products out there.
A fee-only planner isn’t tied to a particular product and has the freedom to look at all financial products in the marketplace. They can recommend the best options for your unique financial needs.
The whole point of working with a financial advisor is to maximize your money and build for the future. Choosing a fee-only planner ensures your financial interests are always the focus.
How to Choose a Fee-Only Financial Planner
As you weigh the options for financial planning, consider the advantages of a fee-only financial planner. They take a holistic approach to financial planning and keep your best interests at heart. Mariaca Wealth Management, LLC considers all aspects of a client’s life to provide the best financial advice for the future.
Our clients experience peace of mind knowing our goal is to help them pursue a path toward a successful and comfortable financial future. Visit our website to get to know us better. We’d love to hear from you. Contact us today to discuss your financial goals.