What is advice-only financial planning?

All investors can benefit from financial advice. Quite simply there is ‘stuff’ that we don’t know. And you don’t know what you don’t know. But there are professionals who do know. There are various types and levels of advice. In this post we will top line what is advice-only financial planning? It can also be referred to as pay-for-service advice.

Most investment and financial planning advice in Canada is attached to the investment recommendation. The investment advisors are paid by the investments. That can create a conflict of interest as the advisor can be motivated by the investment recommendation. And those fees can be hidden, or buried within the investment. With mutual funds, the advisor or dealership will receive the trailing commission. That fee is typically 1% of the fund assets, on an annual basis. The investor will also pay the management fee on the fund.

Conflict-free advice.

Advice-only planners offer conflict-free advice. The client will receive financial planning but no investment recommendation. When you use an advice-only planner there is a wall between the financial plan and the investments used to reach the financial goals. The fees paid is clear and disclosed. It is a direct arrangement between the client and the planner.

Here’s a definition offered by Objective Financial Partners.

Advice-only planners can concentrate on what they do best and where they can add the greatest value. They will create a holistic life plan. They will help you reach your financial and life goals. The separation of financial planning and investment recommendations makes perfect sense. These are specific areas of expertise.

We know and accept specialists in the medical professions. We might embrace that notion in the areas of wealth building and personal finance.

Advice-only planning delivers on …

Again the overarching goal is to help you reach your life and financial goals. Planners will look at …

• Tax planning and preparation.
• Retirement planning.
• Retirement funding strategies.
• Goal based investment strategies.
• Estate planning.
• Insurance assessment and recommendations.
• Family meetings and services.
• Advice on caring for seniors.
• Budgeting and saving and investment coaching.

I like this description from Money Coaches Canada …

“It’s a written document that takes a big-picture look at your whole financial situation, both now and in the future. It identifies and prioritizes your short, medium and long-term lifestyle and financial goals; it clarifies your current financial position, including your net worth and cash flows; and it specifies the steps and strategies you need to take to get from here to there.

A financial plan is a tool with well-defined objectives. It’s a roadmap that helps you define your financial life goals and provides the tools, information and structure necessary to organize your finances and make the most of the money you have. 

Soft skills.

And we cannot forget those soft skills. The encouragement and coaching can turn a financial life around. A great planner can be a mediator. They can help families navigate difficult and emotional times that can involve the transfer of wealth and the sharing of financial assets. At times a planner can be a financial marriage counselor. It can be tough to get a family on track when one spouse is a saver and the other a spender. It’s much more than reports and pieces of paper and emails. The planner’s task is to understand you and your life.

Discovery and implementation.

The process will begin with a discovery period. The planner needs to know what you’re all about. You’ll send in documentation for assets. They need to see where you’re at. And of course they’ll get to know you and your life and financial goals.

After some back and forth, you’ll receive written plans. And then the plan goes into play. The planner can suggest investment and tax and insurance and other specialists. Planners will often work with those professionals who are on your team. While there may be many teammates, you can think of the financial planner as the quarterback.

One time, once a year or ongoing support.

The great advantage of fee-for-service or advice-only planning is that you can pay for what you need. At Kind Wealth you can access a portfolio check up for $349. With that service you will get a breakdown on your current investment fees and asset allocation. They’ll check that your investments match your goals and risk tolerance level. Are your investments in the right plan types?

Kind Wealth also offers a one-time financial advice meeting for $249.

Here’s the pricing for their financial planning services.

Caring for Clients offers hourly consulting at $300 per hour, investment planning for $1,500, retirement planning for $2,500 and a comprehensive personal plan for individuals or couples for $4,500.

Another popular service is Money Coaches Canada.

Here’s their breakdown on fees and who might use those specific services.

And from Spring Financial Planning .

It is estimated there are over 200 financial planners providing fee-only, advice-only financial planning in Canada. In contrast, there are 18,000 Certified Financial Planners, 25,000 financial planners and 90,000 financial advisers in Canada.

That means about 1/6 of 1% of this country’s financial advisers provide advice-only financial planning. But it is a growing trend and it is very popular with Canadians. Rona Birenbaum of Caring for Clients recently reported that she does not have the capacity to take on all of the new client requests.

Do you need an advice-only planner?

How you feel about your finances might offer the greatest insight. Do you feel that your financial life is in order? Is your debt under control? Are you saving and investing on a regular schedule? Do you have proper insurances? Do you have a plan to retire? If you have more questions than answers, you might need an advice-only planner.

It’s also possible that if you have modest assets and you’re early in the stages of filling your TFSA and RRSP buckets …

You might not need to pay for advice.

And remember that the financial plan provides a road map, it does not include the specific investment recommendations. Here’s how you might invest once you have your plan in had.

Thanks for reading? I hope you now have the answers to – What is advice-only financial planning?

Please share your experiences in the comment section.

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