• Nate Baim, MBA, CFP®

Why Hire a Fee-Only Fiduciary Financial Planner?


Guide at night pointing flashlight into sky.


I visited a close friend in Indiana, my home state, a while ago. We talked about money and how best to navigate personal finances. They mentioned a financial advisor recommended a life insurance policy, and they wanted my opinion on it. I looked at the policy and asked them why they felt they needed a whole life policy. I also ran some numbers to calculate the expected internal rate of return (fancy finance language for how much the policy was going to pay the policy owner after accounting for payments). After running the numbers and answering some questions, my friend felt relieved. We both understood that this policy didn't make sense for them. They said something to the effect, "Yeah, I didn't think this policy is best for our situation, and I am happy to hear you agree."


On reflection, it became clear that many consumers must purchase financial products that do not make the best sense for them. And consumers are likely influenced by someone with the title "financial advisor," who is a salesperson incentivized to sell a specific product. Don't get me wrong, we still need insurance brokers, but what they have to sell may not be best for everyone. The sales model focuses on masking financial advice when the engagement is about selling a product. This apparent conflict of interest is why people distrust anyone who calls themselves a financial advisor.


It is this very conflict of interest I wanted to avoid when I established Pursuit Planning and Investments, LLC. I chose to make my firm a fee-only firm, where financial planners employed by the firm must act as true fiduciaries. Under this model:

  • Advice is the core of all client relationships.

  • Planners work for the client's best interest.

  • Advice is accessible and affordable for Millennials and Gen X.


What is the Fee-Only, Fiduciary Planner Model?

The financial advisor business model has changed over the last several decades. From the client's perspective, these changes provide more options, transparency, and services that used to be accessible only by those with a lot of wealth. The fee-only, fiduciary model makes it easier for young professionals, startup families, and recent university graduates with professional degrees to get the advice they need for where they are in life.


The fee-only fiduciary planner gets paid to provide advice to their clients, whether in financial planning, asset management, or both. Understanding the fiduciary standard is vital. When acting as a fiduciary, an advisor must always put the client's interest above their own. Fee-only advisors get paid exclusively by their clients and do not receive commissions or kickbacks for recommending certain products or services.


Trust is at the core of all financial planning relationships. As an investor and saver, you want to find an advisor you can trust and work with who provides a transparent fee structure that you understand.

Advice is The Center of Any Relationship

While investment management and insurance sales have been the industry's focus for years, proper holistic financial planning was often only available to investors with lots of wealth. Today, the fee-only model brings advice back into the mix and makes it more available. More advisors are tailoring their service offerings and client relationship models to focus on a more comprehensive, accessible form of advice rather than strictly focusing on one aspect of the client's financial life.


Financial advice is more than asset picking, portfolio management, or insurance selection. Holistic financial advice helps clients better manage their financial wellness and integrate disparate areas of their life into one cohesive strategy. Financial advisors work with their clients to integrate and optimize the following areas:

  • Goal Planning

  • Budget and Cash Flow

  • Education Planning

  • Student Loan Management

  • Mortgage Analysis

  • Major Purchase Planning

  • Debt Analysis

  • Career Planning

  • Employee Benefits

  • Risk Management

  • Retirement Planning

  • Estate Planning

  • Income and Tax Planning

  • Investment Advice


Under the fee-only model, advice is tailored to help you grow and build wealth as you move towards your goals. In other words, a financial planner now may act as a guide, helping you understand the alternative decisions and potential consequences you need to navigate. The financial advisor can help you make informed strategic decisions about your situation and help you update your plan as the broader economic environment changes. The fee-only model allows the advisor to tailor their advice to what you need in your current life stage.



Working for Your Best Interest

One of the most significant benefits of working with a fee-only fiduciary is the lack of conflicts of interest. The definition of fiduciary is "a person who holds a legal or ethical relationship of trust with one or more other parties." While it may be surprising, not all financial advisors are fiduciaries.


When advisors earn their income from recommending certain products over others, there's an inherent conflict of interest. The concern is that it's tough to know as an investor if the product is truly in your best interest or if it generates the most commission for the advisor. Fee-only helps remove this conflict of interest.



Convenient and Affordable

Before the fee-only model, advisors were limited in the services they could provide. Now, they have much more flexibility. No matter your stage of life, chances are, there's an advisor out there whose pricing and service model fits your needs.

So, what does fee-only look like in practice?


One of the most popular pricing models is the monthly subscription model. Clients have an ongoing, comprehensive relationship with a financial advisor. This allows an advisor to provide financial planning without a client needing investable assets. For instance, their assets may be in their 401(k), but they still need advice across many other areas. This is especially common for Millennial and Gen X professionals.


For investors who prefer one-time advice or DIY their finances, project-based models allow a saver to get personalized advice in a few critical areas of their life for a flat, transparent fee. There are also fee-only models based on assets under management. The advisor charges a percentage of the assets they manage and provides targeted financial planning services in the agreement.

The Takeaway

It's easier to invest now than ever, but creating a successful financial plan remains complex and should be rooted in your situation and goals. Fee-only, fiduciary financial planners can help you build your wealth at any stage of life, for any pursuit– and you'll know they are acting in your best interest.


Pursuit Planning and Investment, LLC is a fee-only fiduciary financial planning firm in Portland, Oregon. Our planners sign a fiduciary oath and do not receive a commission for selling products. We offer virtual financial planning services for Millennials, and Gen X. Feel free to review our services and place a commitment-free 30-minute discovery meeting on the calendar. Plan your pursuit!





Schedule a free call with Nate Baim, MBA, CFP®

 

This work is powered by Seven Group under the Terms of Service and may be a derivative of the original. More information can be found here.


Pursuit Planning and Investments, LLC (“PPI”) is a registered investment advisor offering advisory services in the State of Oregon and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. All views, expressions, and opinions included in this communication are subject to change. This communication is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services. Any information provided has been obtained from sources considered reliable, but we do not guarantee the accuracy or the completeness of any description of securities, markets or developments mentioned. We may, from time to time, have a position in the securities mentioned and may execute transactions that may not be consistent with this communication's conclusions. Past results do not guarantee future results. Please contact us at 971-803-5948 if there is any change in your financial situation, needs, goals or objectives, or if you wish to initiate any restrictions on the management of the account or modify existing restrictions. Additionally, we recommend you compare any account reports from PPI with the account statements from your Custodian. Please notify us if you do not receive statements from your Custodian on at least a quarterly basis. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request, and on our website, www.planyourpursuit.com. This disclosure brochure, or a summary of material changes made, is also provided to our clients on an annual basis.


This communication is for informational purposes only and is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision.


Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal the performance noted in this publication.


The information herein is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Pursuit Planning and Investments, LLC (referred to as “PPI”) disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose.


All opinions and estimates constitute PPI’s judgement as of the date of this communication and are subject to change without notice. PPI does not warrant that the information will be free from error. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall PPI be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided herein, even if PPI or a PPI authorized representative has been advised of the possibility of such damages. Information contained herein should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.