Fixed Fee Advice

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Topic Author
eyemgh
Posts: 221
Joined: Thu Aug 29, 2013 11:50 am

Fixed Fee Advice

Post by eyemgh »

What’s a reasonable fee to pay someone for a one time plan? I’ve done a solid job building wealth, but I could use some help figuring how to wind it down. Things like Roth conversion amount and timing, choosing to maximize that at the expense of ACA subsidy, social security strategy, etc. are all up for discussion. I have a guy I trust who has done our insurance. He’s good, but he wants $3k for a one time plan. It seems high, but if that’s the going rate, it’s important to know. I could dive in and self learn, but I wouldn’t if I could get solid advice for a reasonable price. Thanks!
Last edited by eyemgh on Sat May 08, 2021 12:55 pm, edited 1 time in total.
dbr
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Re: Fee Based Advice

Post by dbr »

I think it would cost that much to come up with a well thought through plan for a person's individual situation considering the kinds of things you want addressed.

A professional advisor operating as a business might charge from $200 to $300 per hour and might apply ten or more hours to the work. It is also a problem for him that getting work in smaller units than that is very inefficient and can't be sustained.

From a different point of view someone asking for the kind of help you want would probably have assets in the seven figure range and be planning on an annual income of say $100,000 -- all of this give or take a factor. So $3000 is 0.3% of a $1M portfolio or an expense increase of 3% on an annual income -- in other words, as a one time cost, negligible. The real question that might impose a cost would be that they get the advice wrong and cost you many tens of thousands of dollars.

A possible comparison is that Rick Ferri offers a portfolio 2nd opinion for $925 but charges $450/hour for further work:

https://rickferri.com/investors/

This is not an endorsement of Rick Ferri but is quoted as a data point. I have no recommendation for any particular advisor.

PS You don't mean "fee based," You mean "fixed fee." Fee based advisors can and do take commissions on products they sell. You want advice not connected to managing assets or brokering investments.
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ruralavalon
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Re: Fee Based Advice

Post by ruralavalon »

eyemgh wrote: Sat May 08, 2021 12:20 pm What’s a reasonable fee to pay someone for a one time plan? I’ve done a solid job building wealth, but I could use some help figuring how to wind it down. Things like Roth conversion amount and timing, choosing to maximize that at the expense of ACA subsidy, social security strategy, etc. are all up for discussion. I have a guy I trust who has done our insurance. He’s good, but he wants $3k for a one time plan. It seems high, but if that’s the going rate, it’s important to know. I could dive in and self learn, but I wouldn’t if I could get solid advice for a reasonable price. Thanks!
I think $3k is less than I paid 15 years ago for fee only investment planning with a CFP.

I do wonder if your insurance guy is knowledgeable about Roth conversions, ACA subsidies, Social Security claiming strategies, and investment planning.

I am wary of "fee based" planning which probably includes the insurance guy recieving commissions for selling a product, and is different than "fee only" planning.

Here are three resources you might use to locate a fee only planner:
1) www.garrettplanningnetwork.com;
2) www.napfa.com;
3) https://adviceonlyfinancial.com/.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
dbr
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Re: Fee Based Advice

Post by dbr »

I agree that it is unlikely an insurance salesman is actually knowledgeable of the things you need addressed, but it could be.

Be aware that an insurance product has a high probability of being one of the solutions offered, but I guess one should not be so cynical.
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Jon Luskin
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Re: Fee Based Advice

Post by Jon Luskin »

eyemgh wrote: Sat May 08, 2021 12:20 pm What’s a reasonable fee to pay someone for a one time plan? I’ve done a solid job building wealth, but I could use some help figuring how to wind it down. Things like Roth conversion amount and timing, choosing to maximize that at the expense of ACA subsidy, social security strategy, etc. are all up for discussion. I have a guy I trust who has done our insurance. He’s good, but he wants $3k for a one time plan. It seems high, but if that’s the going rate, it’s important to know. I could dive in and self learn, but I wouldn’t if I could get solid advice for a reasonable price. Thanks!
You may be surprised to learn that - for certain firms - a financial plan priced at $3,000 is a loss leader. With enough overhead (staff, rent, advertising, etc.) and inefficient internal processes, that's certainly possible. I have worked at financial planning firms just like this.

Why would a financial planning firm offer a loss leader? Because their financial plan culminates in the recommendation to sign up with them for ongoing investment management services.

That's why it's important to work with a financial planner that's not just fee-only, but advice-only.

(Of course, as an advice-only planner, I'm biased towards advice-only financial planning. But then again, I choose this billing model because I feel it's the best way to help people.)

Good luck with your search! :D
When there are multiple solutions to a problem, choose the simplest one. ~Jack Bogle
Topic Author
eyemgh
Posts: 221
Joined: Thu Aug 29, 2013 11:50 am

Re: Fee Based Advice

Post by eyemgh »

ruralavalon wrote: Sat May 08, 2021 12:46 pm
eyemgh wrote: Sat May 08, 2021 12:20 pm What’s a reasonable fee to pay someone for a one time plan? I’ve done a solid job building wealth, but I could use some help figuring how to wind it down. Things like Roth conversion amount and timing, choosing to maximize that at the expense of ACA subsidy, social security strategy, etc. are all up for discussion. I have a guy I trust who has done our insurance. He’s good, but he wants $3k for a one time plan. It seems high, but if that’s the going rate, it’s important to know. I could dive in and self learn, but I wouldn’t if I could get solid advice for a reasonable price. Thanks!
I think $3k is less than I paid 15 years ago for fee only investment planning with a CFP.

I do wonder if your insurance guy is knowledgeable about Roth conversions, ACA subsidies, Social Security claiming strategies, and investment planning.

I am wary of "fee based" planning which probably includes the insurance guy recieving commissions for selling a product, and is different than "fee only" planning.

Here are three resources you might use to locate a fee only planner:
1) www.garrettplanningnetwork.com;
2) www.napfa.com;
3) https://adviceonlyfinancial.com/.
He is a CFP. When I mentioned the CBP we are doing when we sell our business, Roth conversions, and ACA subsidy, he said I was asking all the right questions. So, none of what I was asking was foreign to him.

Thanks for the resources!
Topic Author
eyemgh
Posts: 221
Joined: Thu Aug 29, 2013 11:50 am

Re: Fee Based Advice

Post by eyemgh »

dbr wrote: Sat May 08, 2021 12:52 pm I agree that it is unlikely an insurance salesman is actually knowledgeable of the things you need addressed, but it could be.

Be aware that an insurance product has a high probability of being one of the solutions offered, but I guess one should not be so cynical.
Actually, thankfully, it was not. In fact the conversation was about ending all of our life insurance and disability policies now that we don't have any long term debt. He agreed with that approach. He did talk about LTC insurance. I just have to wrap my head around the math, but will likely self insure.
Topic Author
eyemgh
Posts: 221
Joined: Thu Aug 29, 2013 11:50 am

Re: Fee Based Advice

Post by eyemgh »

JonL wrote: Sat May 08, 2021 12:53 pm
eyemgh wrote: Sat May 08, 2021 12:20 pm What’s a reasonable fee to pay someone for a one time plan? I’ve done a solid job building wealth, but I could use some help figuring how to wind it down. Things like Roth conversion amount and timing, choosing to maximize that at the expense of ACA subsidy, social security strategy, etc. are all up for discussion. I have a guy I trust who has done our insurance. He’s good, but he wants $3k for a one time plan. It seems high, but if that’s the going rate, it’s important to know. I could dive in and self learn, but I wouldn’t if I could get solid advice for a reasonable price. Thanks!
You may be surprised to learn that - for certain firms - a financial plan priced at $3,000 is a loss leader. With enough overhead (staff, rent, advertising, etc.) and inefficient internal processes, that's certainly possible. I have worked at financial planning firms just like this.

Why would a financial planning firm offer a loss leader? Because their financial plan culminates in the recommendation to sign up with them for ongoing investment management services.

That's why it's important to work with a financial planner that's not just fee-only, but advice-only.

(Of course, as an advice-only planner, I'm biased towards advice-only financial planning. But then again, I choose this billing model because I feel it's the best way to help people.)

Good luck with your search! :D
I like that idea! Thanks!
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