Something else people should be aware of if they want fee-only advice is that the fees are substantial, but also flexible. Peggy Cameron, an Ottawa fee-only planner, charges $225 per hour plus HST and generally bills clients for $1,500 to $2,000 per financial plan.
Too expensive for you? Short consultations with clients are also an option. “I can accomplish an awful lot in an hour,” she said.
Ms. Cameron said the bulk of her clientele are people who have advisers and are looking for second opinions. These days, many of the questions clients have are about retirement. “People are asking, do I have enough money to retire, how long will my money last, what kind of income can I expect to enjoy? Somebody wanted to know, could they afford to live in another city?”
Fee-only advice is client-friendly, and it turns advisers into professionals who sell expertise rather than products. So why isn’t it more popular? First, it’s not a lucrative business model for advisers.
“It’s tough because most of your clients are coming in just for a financial plan – there’s no ongoing relationship,” Mr. Lamontagne said. “So you constantly have to go and get new clients.”
Getting those new clients is a challenge because many people are surprised to be asked to pay directly for financial advice. They’ve been trained by the mutual fund industry to believe that advisers work for free.
Advisers who sell mutual funds are typically compensated through trailing commissions that are siphoned out of the fees fund companies charge investors who own their products. Investors are often oblivious to trailing commissions, and that in turn makes them testy when asked to pay out of pocket for advice.
“I’ve had people come to me say, why would I come to you when I can go to this guy and get it for free?” Ms. Cameron said.
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Find an adviser
The biggest challenge faced by people who want fee-only advice is to find a firm or adviser to deal with. Here are four places to look:
1. I invited my personal finance community on Facebook to provide names of fee-only advisers this week, and the result is quite a few leads in several cities.
2. The personal finance magazine MoneySense has for a couple of years maintained a database of fee-only financial planners in British Columbia, Alberta, Manitoba, Ontario, Quebec and Prince Edward Island.
3. The online "find an adviser" search engines provided by the Financial Planning Standards Counsel and Institute of Advanced Financial Planning both allow you to focus on compensation. If you choose fees, be aware this could mean fee-only or fee-based. You'll have to contact advisers directly to find out what fee options they offer. Note: For the FPSC search engine, you must click on “advanced search options.”
4. A Google search along the lines of “fee-only financial planning Calgary” is well worthwhile.
