Paying for financial advice...

Posted by Valley Financial Group

Ben Franklin once said that any investment in Knowledge always pays the best interest.

Do you think that Old Ben would believe in his own words when it comes to paying for Financial Planning advice?  In the past and sometimes even today an advisor/broker would charge a commission for recommending a stock, bond or investment product to help you achieve your retirement needs.   Today, financial planners offer different methods of payments and more comprehensive financial services.  Here are some payment methods:

-           Fee for service (Hourly Fees) - you pay an advisor for their time and specific recommendations.

-          Assets under Management. Typically a percentage (usually around 1.0%-1.5%) on the assets that the advisor is managing

-          Or both 

These fees and financial services you are paying for like income planning, estate planning, tax planning and portfolio architecture are more transparent today than in recent in years. You know how much you are paying for advice.  The question really is “Is there Value in Paying for Financial Advice and Planning?”   If you look at the numbers, according to Money Magazine, 1 out of 3 Americans have $0 saved for retirement and 56% of Americans have less than $10,000 saved for retirement (https://www.google.com/amp/amp.timeinc.net/time/money/4258451/retirement-savings-survey/%3Fsource%3Ddam).

So based off the numbers, Americans look underprepared for retirement and may need help planning.  Also, Vanguard believes that those who work with advisors experience a 3% improved performance  than those who did not work with one ( https://www.vanguard.com/pdf/ISGQVAA.pdf).  What you pay your financial advisors matters and could have an impact on your financial and retirement results.  So you need to be aware and educated on what financial planning is costing you.  However, not working with a Financial Planner and not having a financial plan seems to be more costly than the opposite.