Wednesday, March 22

Is Cost/Benefit Dead?

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By Ed Morrow

In a recent entry on this blog I discussed whether the plans you are producing make sense.  Just to keep the math simple and not frighten away the RFC members who have not yet charged fees, I suggested the benefit of $10,000 in the future might have a present value of $5,000 which would be a healthy return on a $1,000 Plan Fee.

Forget that!  Let’s get real!  If your clients really value your financial advice they will pay a lot more.  $3,000 would be the minimum and $5,000 average and some planners are charging up to $25,000.  I am not talking about AUM (Assets Under Management) fees.  I mean the fee you charge for the testing, examination, diagnosis and prescription – not the surgery, therapy or radiation treatments delivered by a physician.  And remember, you are proposing treatment of the second most important organ in the human body – the wallet.

If you spend hours gathering facts, objectives, goals, emotions, and family history, plus the organization of all that data and testing various treatments and portraying it vividly to a client – you are at least 75% of the way toward the implementation of successful financial improvement.

One thing that attracts RFC members to planning for business owners is that it clearly does not require “investment advice” as described by the SEC and the various pieces of legislation and regulation.  So they can charge a fee of any amount and not be involved in SEC, RIA or FINRA.

You can do the same with advice for consumers personally.  Avoid any investment advice during the plan design and implementation stage and avoid those issues.  Of course, if you later offer AUM or sell securities products then those actions are subject to regulation by the SEC and its cohort FINRA,

Should a broker/dealer or RIA get a portion of your Plan Fee, despite the fact that it contributed little or no effort toward the construction and implementation of the Plan?  That will depend on you, your b/d and your legal counsel.

If you want to see a sample of an Engagement Agreement, Disclosure and Plan Assurance documents, then email the IARFC office.  Be sure to let us know if you are interested in business clients or individuals.  Send your email to:


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