26 Nov Are there fee-only advisors who do not manage assets?
Q. Are there fee-only financial advisors that provide financial guidance and advice without a requirement to manage assets? I am a retiree and I am looking for some direction. Almost every firm I looked at required at least some assets under their management.
But before we get to the details, let’s go over the sometimes-confusing landscape of financial advisors and their compensation methods.
Financial advisors generally work under three basic compensation methods: those who receive sales commissions, those who charge both commissions and fees and those who are fee-only.
Fee-only advisors receive no commissions, referral fees, or other sales-related types of compensation, said Gene McGovern, a certified financial planner with McGovern Financial Advisors in Westfield. They receive their fees only from clients.
Some fee-only advisors calculate their fees as a percentage of the assets they manage for clients, such as 1 percent per year, McGovern said. They may set a minimum amount of assets to be managed as a condition of taking you on as a client.
Other fee-only advisors charge hourly or flat fees for specific projects, while some may combine these compensation methods, he said.
“Advisors who charge flat or hourly fees are most appropriate for clients such as you who don’t want or need professional asset management,” he said. “These advisors are sometimes known as `advice-only.’”
You can find advice-only advisors in several places.
You can try the “Find an Advisor” search tool at the National Association of Personal Financial Advisors (NAPFA).
NAPFA members are all fee-only fiduciaries who must meet rigorous competency, ethical, and continuing education standards,” he said. “Some NAPFA members charge an assets-under-management fee, while others provide advice-only services.”
You can also look at Harry Sit’s Advice-Only Financial website, which refers you to a network of advice-only planners for a fee.
Or you can try the Garrett Financial Planning Network, which offers a network of planners who charge hourly or flat fees.
And then there’s the XY Planning Network, which generally focuses on younger clients and has monthly subscription plans available.
Regardless of the advisor’s compensation method, one other important consideration to bear in mind is his or her credentials, McGovern said.
“Those with the certified financial planner designation issued by the CFP Board have attained the gold standard in financial planning competence and must serve as fiduciaries to their clients whenever they provide financial advice,” he said. “They’re required to act in the client’s best interest at all times.”
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This story was originally published on Nov. 26, 2020.
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