Hiring a financial advisor is hard, there are many niche terms like “fiduciary”, “best-interest”, “broker-dealer”,”fee-only,” and “advice-only”. While everyone seems to emphasize transparency and “client-first” approaches to planning, there are distinct differences amongst financial professionals that you, as a client, may not fully understand. How do you know which type of advisor is right for you?
What is Advice-Only?
Advice-only financial advisors offer unbiased guidance without managing assets or earning commissions. They charge an upfront fee for their financial advice, and clients can work to implement the recommendations with or without additional help from the advisor. This differs from traditional fee-only advisors because fee-only advisors are further incentivized to offer direct management for assets. This often causes the advice given to slant towards assets under management discussions.
Of course, there are plenty of other fee structures besides just those as the chart below illustrates:
Every financial advising firm is different and offers its services in its own unique way. But the information above is a general guideline when it comes to categorizing your choices for advisors.
As a side note, the fee structure of your advice may not be the only item of importance for you – whether the firm is more virtual-based or set up for face-to-face interactions could be an aspect that is important for a potential client to consider as well. It is important to do a thorough review of their services and limitations before interviewing the advisor you select.
Why My Financial Coach Chooses Advice-Only (The Primary Care Model to Financial Services)
Financial planning should never be about fulfilling a quota; that’s why we set up our business model to be client needs-based only. We coordinate or create a personal financial team with your personal Financial Coach CFP® professional and, when necessary, Subject Matter Experts (SMEs) from all financial disciplines.
The way we see our role is similar to the primary care model of healthcare. Under the primary care model of financial planning, your financial coach acts as your primary financial care professional. This means that they will work with you to review your financial picture. This means that when we look at your financial bloodwork, we may work with you on small but important topics. Think of this as financial dieting and financial exercising.
However, just as many primary care physicians find abnormalities or problematic chart readings, we will make sure to surface any financial concerns that may have brought you to MFC. Sometimes, we may prescribe financial medicine for you to get filled. This may be in the form of increasing your retirement contributions to your employer plan, exploring parts of your employee benefits, or reviewing your business structures.
Unfortunately, not everyone can take financial exercise and prescriptions. That is when My Financial Coach is able to explore the universe of financial professionals to act as “Subject Matter Experts”. These individuals help with identifying additional financial treatment options that are tailored to move individuals to better financial outcomes. This may be as simple as setting a retirement plan for your small business in place, to fundamentally altering your estate plan.
Our financial coaches are never compensated for any work done with our experts, similar to how your primary care physician is never compensated for surgery referrals.
“I signed up for the MDVIP financial planning benefit and am really happy with their process and received lots of value. They used one of their subject matter experts to make a different pension plan recommendation that met my goals. I am happy to endorse My Financial Coach and would encourage others to use it.”
– Dr. Lillian Cohn
There are lots of testimonials like this one, and surely, plenty more soon to come because we’ve designed an advising process that works.
While both fee-only and advice-only models promote client interests, advice-only offers a more enhanced level of transparency and unbiased nature. My Financial Coach, as a company, has dedicated our practices to being a solely advice-only financial service while still being able to provide reliable solutions outside of our expertise to our clients. We strive to help our clients as they work towards financial goals and give them strategies backed by integrity.
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