The case is almost opposite if you are looking for a fiduciary financial planner—one who is client-centered and advice driven, where the focus is not on selling high-commission financial products but delivering advice for a fee. The shortage of financial planners was one topic of discussion at the Insider Forum Conference that I attended this fall in San Diego.
The largest generation, the Baby Boomers, have hit retirement age, increasing the demand for financial planning. Also, more and more GenXer’s and Millennials are discovering advantages to having a professional planner. All this increases the demand for real financial planning services.
Many financial planners cannot keep up with the demand because there are not enough financial planners entering the job market. I am told by recruiters and professors that many graduates of financial planning programs are snapped up by large Wall Street investment firms engaged in the sale of financial products. These firms are able to pay salaries significantly above what independent financial planners can afford.
This shortage forces many established financial planning firms to limit client numbers by imposing a moratorium on accepting new clients, increasing fees, or raising their minimum fee threshold. These last two are the most common.
Can you imagine finally getting the confidence to call a financial planner, or suddenly having a life event that requires the help of a planner, only to be told you don’t have enough in assets or the minimum fee is far beyond what you can afford? It happens every day. It leaves a bad taste in the mouth of a consumer to be turned away from a planner because they don’t “qualify.”
This isn’t because the financial planner is heartless, greedy, or doesn’t care. Planners are financial caregivers and inherently have big hearts. Movie producer Ed Saxon even says, “Financial planners play a pastoral role in keeping people safe and taking care of them.” It hurts any planner to have to turn away people who truly want and could benefit from their services.
Yet they simply cannot financially, emotionally, or physically serve everyone. On his “Nerd’s Eye View” blog, financial journalist Michael Kitces points out that “today’s financial advisor population can barely serve 15% of all US households, and the CFP certificant population is only numerous enough to serve 4% of households.”
To try and meet this demand, most financial planning firms are trying to increase efficiencies through embracing technology, standardizing work flows, and outsourcing indirect client support functions like para-planning, bookkeeping, rebalancing, performance reporting, and investment selection. This helps planners spend more time face-to-face with clients helping them to make sound financial decisions.
Another embryonic possibility is offering financial planning to groups of clients, rather than one-on-one. Groups have been used by psychotherapists for decades to deliver effective therapy at a lower cost. Delivering financial planning in this way is something other planners and I have long discussed. This fall, my associate, Sarah Swantner, CFP, NCC, and I are doing a pilot group for the Black Hills Community Education program.
If you have trouble finding a fiduciary financial planner, consider these options while you’re looking: Find informal financial mentors. Look for a planner who works with clients remotely, as many do. Educate yourself through books, videos, and classes that provide investment and money-management information without trying to sell you financial products.
This way, when and if the shortage eventually eases, or you become able to afford a planner, you’ll bring a degree of financial confidence and clarity into that partnership.