How Much Does Financial Planning Cost?

This question is impossible to answer generically… Why? because it’s purely based off individual perceived value.

The concept of exchanging something of perceived value (money) for a service/product that has equivalent perceived value has stood the test of time for humans. We have done it day in and day out for millennia.

What about Financial Planning Cost? The question itself assumes that financial planning has some sort of value attached to it. I’ll tell you as a friend, there is an extreme amount of value to it! I must include my bias though, since I feed my family by way of investment advice and financial planning.

The perceived value of financial planning is based off your experience with the industry and your relationship with money. If you ever worked with a financial professional before or if you cringe at the thought of talking about money, then you have a judgement about the value.

People tend to steer clear from things that are difficult. Whether its education, emotions, business, or something else; your approach and perceived value depends on your upbringing and experiences. Financial planning can be difficult. Sometimes from a lack of understanding (to no fault of your own) or an unwillingness to engage in the process because of fear, anxiety, or some other personality trait. These experiences and personality traits shape the perceived value of the service.

If a bad experience with a financial advisor led to a loss of money or trust, then its no question that the value of something like financial advice will decrease as a result. Same for someone who was raised in a household where talking about money was awkward or shunned. The perceived value could be based upon fear or anxiety, and therefore lowered in value or necessity. The same goes for positive experiences, the value would increase.

How someone perceives financial planning doesn’t increase or decrease it’s value though…

It’s value is determined by the outcome that is produced as a result of the planning.

I’ll repeat that. The value of financial planning is determined by the outcome that is produced as a result of the planning.

If what you want to happen financially isn’t happening, then you can reasonably determine that exchanging your money for a better outcome might be worth it. The big question: What’s the cost for that?

Ha! Well… It is completely determined by the advisor you work with! Back to square one!

The advisor also perceives their expertise and service as valuable. To what degree? Like you, that depends on their experiences and relationship with money…

Just one big endless circle of perceived value!

Don’t get me wrong, most people understand that education, information, and customer service all have value and they are willing to pay for that value. Determining what the cost should be is the most difficult part of the financial planning business. What’s the best quantifier?

Time is the best quantifier.

Time is money, and advisors only have so much of it. So, they spend time in their life to help you and your life. Unfortunately, this comes at an opportunity cost for most people.

Since every person has a distinctly different background and relationship with money, the advisor spends various amounts of time with people on the same topics. This inherent time management problem for advisors cannot be avoided. So, advisors do what they can to help as many people as they can, in the shortest amount of time, while attempting to earn as much income as they can in order to feed their families! Again, it’s all based on their perceived value as an advisor. Their expertise and relationship with money determines what clients they can serve with the time that they have to give.

This dilemma for the advisor takes the form of asset minimums, income minimums, net worth minimums, flat fee arrangements, or some other version that leaves most people outside the realm of clients that can be helped. The industry calls these people that cannot be helped, outliers.

We don’t like having outliers. We believe that anyone who desires to change their outcome, if willing, can change their outcome. They just need the tools, the team, and the accountability to accomplish it.

In fact, we believe in that tenent so much that we allow reductions or the complete removal of our planning fees based on time spent and engagement in changing your outcome. Your net worth, experiences, and relationship with money should not limit your ability to work with a financial advisor and create the financial outcome you deserve. Only your willingness to engage and act should be the factor.

The time we spend working together will be on producing a financial outcome that you want, and that is aligned with your values. The more time you are willing to invest, the better your life and financial outcome will be.

Have a blessed day!

Share this post