THE TRUTH ABOUT ADVICE-BASED PLANNING

Those of us endeavoring to separate ourselves from the “salesmen” in our industry, often call ourselves fee-based planners. Here is the problem: We are defining ourselves based on our fee and not our service or value. 

Advice-Based Planning 

True professionals in other industries don’t market themselves on how they get paid. For example, CPAs and attorneys don’t say they are retainer based or hourly. They market themselves based on what they can do for the client.

If we make the shift to calling our practices "advice-based", we are emphasizing the most important part of how we do business. We're giving clients advice in order to help them make better financial decisions. 

With Advice-Based Planning, we get off of the hamster wheel of comparing this fee structure to another fee structure and focus on the key differentiator between true fiduciary planners and salesmen. 

Our advice is our product. 

Our advice is independent. 

Now, don't get me wrong. I am not saying we all need to be fee-only financial planners. And I am not saying that we can ONLY offer advice and not implement the plans we create for the client.  

I am saying that our advice has to be able to stand alone as the primary deliverable. Once that is true, the next step, implementation can occur. 

I actually believe that our clients are better off if we do fully implement their financial plans. I know that there are many great fee only planners out there, but there are many that get paid $3,000-$5,000 to build a plan for a client. At that point, they hand it over and the say, "Good luck when it comes to implementation." 

I think that this is a travesty.  

The initial plan isn't the hard part. Guiding the client over years to accomplish their goals is where the magic happens because the vast majority are not going to follow through on their own and accomplish their goals without help. 

The way that I approach it is that I make sure that a client CAN hire me for advice only, planning only. I make sure that every relationship starts on a fiduciary, advice-based footing. Then when it comes to implementation, I let them know what I recommend. 

The vast majority of the time, clients do implement their investments and insurance with me. But they don’t have to.  And I am happy to serve clients who want a advice-only relationship. 

Looking Forward 

Maybe in the future more of us will be flat-fee planners who have a network of trusted partners that we recommend and collaborate with for implementation.  I don’t know…. 

I do know that if we want to be on the cutting edge in this business and remain relevant as products of all types are commoditized, we have to be in the advice business. And we have to build businesses that make it easy for our clients to fully implement their plans and walk with them down the path towards their goals.  

What do you think? 

With Purpose,

-Lucila

Have any questions or feedback? I'd love to hear from you at [email protected]. Also, find tips, support, and motivation at The Intentional Advisor Mastermind Facebook group!