How much to pay for a GOOD financial plan?

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Malcolm2012
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How much to pay for a GOOD financial plan?

Post by Malcolm2012 »

What should I expect to pay for a _good_ financial plan from a fee only certified advisor, and is it generally worth the money?
I recently picked up the Kindle edition of Ray Levitre's book 20 Retirement Decisions You Need to Make Right Now, which seemed very well thought out.
I found his company website, networthadvice.com and saw he charges $1500 roughly. Is this standard, and would it add value for someone with pension, investments, and a few years away from retirement? Seemed like alot for someone who might run something like Firecalc or something, but an outside opinion could be useful.

Thoughts?

Thanks,

M
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NAVigator
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Re: How much to pay for a GOOD financial plan?

Post by NAVigator »

I don't think anyone can say what is a _good_ financial plan or what is an appropriate charge. I believe most of us create our own financial plan. There are many books that offer good advice and financial planning examples for various situations. Our Wiki goes into some depth in this area. It is well worth the time to read it. There are many books shown in the recommended list.

Whatever plan you end up with must be something appropriate for your needs. Who knows you better than you? If you trust someone else to create a plan for you more than creating your own plan, then it is worth the expense. Be aware that most advisers will recommend what they happen to be selling and usually at a higher cost than what you can obtain elsewhere. The choice is yours.

Jerry
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Majormajor78
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Re: How much to pay for a GOOD financial plan?

Post by Majormajor78 »

I've never paid for a plan but have spoken to others who have. $1500-$2500 is fairly common for a one time total financial plan but there is a huge variation within the industry. If you really want to go this route you want to make sure that the advisor really gets to know your situation and is able to give you a total financial plan that touches upon all aspects of your life. Some will just rubber stamp something that looks amzingly like one of the lazy portfolio's with the addition of a sector specific fund to chase whatever is hot.
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yobria
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Re: How much to pay for a GOOD financial plan?

Post by yobria »

Malcolm2012 wrote:What should I expect to pay for a _good_ financial plan from a fee only certified advisor, and is it generally worth the money?
I recently picked up the Kindle edition of Ray Levitre's book 20 Retirement Decisions You Need to Make Right Now, which seemed very well thought out.
I found his company website, networthadvice.com and saw he charges $1500 roughly. Is this standard, and would it add value for someone with pension, investments, and a few years away from retirement? Seemed like alot for someone who might run something like Firecalc or something, but an outside opinion could be useful.

Thoughts?

Thanks,

M
If all they're doing is clicking on the Firecalc website, I'd say $1500 is too much. If they're developing a detailed, lifetime financial plan based on dozens of variables and plenty of analysis, it might be cheap. Ask to see a sample plan.

Nick
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Raybo
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Re: How much to pay for a GOOD financial plan?

Post by Raybo »

I've had several financial "plans" over the years, usually the "free" ones offered by a financial planner. They usually contain lots of numbers and charts. However, they involve lots of assumptions, illustrate the use of products (usually insurance based) offered by the planner and go out of date quickly.

Anyone who can use a spreadsheet program can generate the numbers and charts.

I'd start by trying to create your own. Then, you will have a good idea of the issues you find important and the assumptions that you are willing to make. After that, you will be in a better position to tell someone what you want in a financial plan and what assumptions you think are reasonable.

In my experience, most planners will use a financial plan as a sales tool.
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Bob's not my name
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Re: How much to pay for a GOOD financial plan?

Post by Bob's not my name »

$0 is a good price. I wouldn't pay more than that.
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Re: How much to pay for a GOOD financial plan?

Post by afan »

Vanguard offers financial plans for a fee if your investments with them are below a certain level. I think the maximum price is $1000, down to zero if you pass a threshold. They describe them as covering the appropriate topics. They will apparently make suggestions for you to invest in Vanguard funds, but not otherwise use it to sell you products.
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Malcolm2012
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Re: How much to pay for a GOOD financial plan?

Post by Malcolm2012 »

I will ask for sample plan, good idea. I have done my own plan by various means, but I suppose I am looking for some outside look so I can be confident I have not missed something. Part of my checks and balanced approach as I move toward retirement, and from the accumulation phase to some withdrawals. I am not interested in someone managing my account on an ongoing basis. We all know the problems with that.

Some years ago I spoke to a 'financial planner' at Schwab on a free consultation. After 5 minutes it was clear I knew much more about financial planning than the 30yo who met with me. That would be my concern at Vanguard where I also have some funds.

M
Last edited by Malcolm2012 on Sun Jan 29, 2012 3:03 am, edited 1 time in total.
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Re: How much to pay for a GOOD financial plan?

Post by Bob's not my name »

Malcolm2012 wrote:I suppose I am looking for some outside look so I can be confident I have not missed something.
Try this: http://www.bogleheads.org/
carolinaman
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Re: How much to pay for a GOOD financial plan?

Post by carolinaman »

I have accounts at both Fidelity and Vanguard and have used both for financial plans. Vanguard’s was simply an investment plan and was useful from that perspective. Fidelity’s was more in-depth, requiring me to project my retirement expenses in detail by various expense categories. That was a time consuming but good exercise because getting a good projection of your income needs in retirement is foundational to your retirement plan. Fidelity did touch on other aspects of retirement but focused primarily on the amount of money needed, AA and investments. I did not have to pay for either due to my account status with each company. If your definition of a financial plan is AA and investment portfolio both of those are fine.

However, if you define a financial plan as more comprehensive to include all facets of retirement: health insurance, long term care, estate planning, etc. then you may want to consider one of the higher priced plans. Obviously, you would need to do your homework and definitely get sample plans so you understand what you are getting in advance. Also, be sure to reference check whomever you choose.

Like others, I do not want to pay for something that I can do myself. However, there are a lot of factors to consider and it is easy to make costly mistakes. Considering what is at stake in planning your future, $1,500 may be a great investment with many future returns. Best wishes,
John
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dandan14
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Re: How much to pay for a GOOD financial plan?

Post by dandan14 »

when I worked for a fee-only firm for a while, they did this as part of their business (in additional to wealth management).

Even at $1500, it was often just a break-even or even a money loser for them. The difference is that they were putting significant time into each financial plan, and not just giving cookie cutter advice. Each person's scenario is different -- and if you want a real, customized, well-thought-out plan that isn't just a sales pitch....then I think $1500-$2000 is a reasonable price.

Keep in mind that places like Ameriprise will give them to you for free....but they are templates printed out by their software (and sometimes there is a place for that). For these companies, the "plans" are more of a fishing strategy to get you into the office and talk about how you can start working with them (and paying their associated fees).
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Midpack
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Re: How much to pay for a GOOD financial plan?

Post by Midpack »

I also paid nothing, did it myself. More than ever, you can get all the data and knowledge to do your own plan without spending a dime these days. I got a quote for a professional plan as a second opinion, it was $1500 and I didn't follow up with them - no way I'd pay anything like that for what would be a cosmetically tweaked but essentially generic plan.

I realize some people don't want to do their own plan. But if they just leave it to a professional, how will they know when/if the plan has gone off track and what if anything to do about it? Using a professional is probably an expensive, ongoing need...but necessary/worth it for some.
Last edited by Midpack on Sun Jan 29, 2012 1:46 pm, edited 1 time in total.
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FabLab
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Re: How much to pay for a GOOD financial plan?

Post by FabLab »

Bob's not my name wrote:$0 is a good price. I wouldn't pay more than that.
Seems like the right price to me.

Malcom2012: even if you do end up paying for a financial plan, please try to absorb as much good information as possible beforehand. Look into the materials on the forum's wiki first. Should you go the paid route, you will have a better understanding of what you can expect and what should be an outcome satisfactory to you.

Good luck!
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Malcolm2012
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Re: How much to pay for a GOOD financial plan?

Post by Malcolm2012 »

Thanks, I have been reviewing the Wiki as part of my continued education. I agree that $1500 seems a bit much for a one time review/cross check.

Question, I am aware of Firecalc and similar products, but is there something similar that will generate a more comprehensive plan? I would like it to include, not only Firecalc style projections, but analysis of withdrawal types/amounts, LTC and Estate planning issues.

Ideas?

I know that many BH's do all this on their own, however I like to double check my own planning...

M
livesoft
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Re: How much to pay for a GOOD financial plan?

Post by livesoft »

You could buy the deluxe version of ESPlanner

Fidelity has a good RIP.

The wiki has a list of calculators like this as well. All these calculators and CFPs operate the same way: Garbage In; Garbage Out.
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Re: How much to pay for a GOOD financial plan?

Post by Raybo »

I know that many BH's do all this on their own, however I like to double check my own planning.
Why not post it here when you have worked through it and get it checked?
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frequentT
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Re: How much to pay for a GOOD financial plan?

Post by frequentT »

A 'good' financial plan is beyond the reach of most people, at least what they are willing to pay for one. The prices mentioned here are good reference points. For $1500 you can receive something pretty awful to a good honest effort, which would still be too superficial for many people who visit the board and have very strong skills.

That is why there are so many boiler plate plans that are hastily turned out to be used either as a sales tool or a loss leader. A good planner cannot find many clients who would pay for the 'real deal'. A comprehensive plan should include the following:

Components of a Financial Plan


Budgeting/saving/managing cash flow

Risk management (insurance)

Investments

Tax strategy

Retirement planning

Estate Planning

You should expect to see an in-depth treatment of each area using a variation of a SWOT (strengths, weaknesses, opportunities,threats) supporting tables, data, graphs, schedules etc.. Most importantly, an action plan with a time table.

Could you do one yourself? Given the time and effort, there are many Bogleheads that could do a reasonable job. If your needs are not as broad as described above, even more likely. Before you start, write a list of questions that you want your plan answer and issues/problems you want addressed. Use the list to guide your plan development.

If you need only retirement income analysis and planning , I agree there are many good tools that are available for free and for modest cost. The Fidelity site has an excellent tool. The ESPlanner is ~$200 and extremely robust and rigorous, though not the most 'pretty' or user friendly. The Boglehead community can also help as you work on your plan.

Another alternative for the do-it-yourselfer, is to create your own plan, or section of a plan to address your needs; and then find a fee- only Financial Planner who is willing to work on an hourly basis. Then schedule an appointment, present your plan, your analysis and your proposed solution/actions and ask for critical review and critique. If the recommendations are logical, you can implement them yourself or hire the FP to assist. Pay for his/her hourly fee the way you would for a CPA or attorney.

If your needs are retirement calculations and projections, an accountant/CPA can check your numbers and also review for tax implications.

I hope these suggestions are useful.

Good luck!
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