One of the ironies of my profession is that, if you want to accumulate wealth and financial security, you would benefit greatly from the services of a financial planner. Yet generally people can’t afford a financial planner until they have already accumulated some wealth.
This inherent contradiction raises a question. How can planners succeed as professionals, be compensated fairly for their expertise, and still provide services to people other than the wealthy?
Periodically I interview potential new clients who could benefit from my advice, yet whose assets are too small to justify my minimum fee. These interviews are frustrating, because they remind me I haven’t figured out how to help people who can’t afford my services.
Like most fee-only financial planners, I have a minimum fee. This is a necessity if I want to stay in business. It takes the same time, effort, and expense to construct an investment portfolio for $100,000 as it does $1,000,000. Because the industry standard for setting fees is based in part on the size of the portfolio, without a minimum fee I would earn the same paycheck from one person with $1,000,000 as I would helping ten people with $100,000 each.
Given the choice of earning $100 for one hour’s work or $100 for ten hours’ work, what would you choose? Financially, the decision is a no-brainer.
Yet the human element isn’t so simple. I know I have the knowledge and skills to help a large group of people. Yet, if I took the time to help every person I could, regardless of the economics, my staff would be overworked, my relationships would suffer, and before long my business would fail. So I choose to limit my services to those that can afford them.
But that doesn’t mean I and my fee-only peers turn a blind eye to those who cannot afford our services. Planners who wish to be personally responsible as well as professionally successful do feel an obligation to share their knowledge with those who don’t already have a high net worth.
Many planners try to give back to their communities by providing pro bono services to non-profit or charitable organizations. Others give talks to groups about the basics of investing or money management or volunteer with programs such as Junior Achievement, intended to teach school children about business, taxes, and the economy.
Many advisors give seminars or classes at a low cost. Offering such programs online makes it even easier to reach more people economically. One way I’ve chosen to make my advice accessible to anyone is by writing books. For $17 someone can obtain the general information that underlies the services I provide to my clients.
Increasingly sophisticated Internet tools enable financial planners to gather client information and distribute information quickly and inexpensively. This can help planners keep costs down and enable them to serve more clients who don’t have a high net worth.
The Internet also makes it possible for more and more people to access skilled and unbiased financial advice. One resource I recommend is Myfinancialadvice, Inc. (myfinancialadvice.com). This company provides online financial planning services at hourly rates.
The goal of Myfinancialadvice is to make fee-only financial planning available to middle-income clients. These consumers expect to and can pay for financial planning services. True, they can’t afford more complex services such as complicated asset protection plans, but they don’t need those services. Plain vanilla planning is more than sufficient.
Maybe you are also at that “plain vanilla” stage when it comes to providing for your financial future. If you’d like to find affordable help, the Internet may be a good place to start.