Developing plan takes time

Posted by on Apr 15, 2013 in Articles, Financial planning | 0 comments

Developing plan takes time

It stands to reason that unless a financial planner was born with a very big silver spoon, particularly in light of the expense to operate a business, no one is going to practice financial planning with the liability attached to it, put the hours into a proper analysis to develop a well thought out set of recommendations, “for the love of mankind.” Our society is just not structured in such a way that would allow this form of existence for long.

No more than you would expect your physician to perform a complete comprehensive examination with all the tests included free of charge, would a true comprehensive financial plan be able to be prepared for no charge. Physicians can generally charge for an initial consultation with fees ranging from as little as $25 to as much as $500 or more depending on qualifications and the time that the physician spends with you.

The amount of time necessary to develop a proper financial plan which takes into account all of the issues having to do with living (education for children, retiring, dying, long term disability, business planning, etc.) is not common knowledge. However, the process takes from anywhere from 50 to over 100 hours to be done thoroughly.

This is a period of intense analysis, study, evaluation, review, research, outlining, writing, editing, and re-editing, before it’s ready to be presented to the client. How can anyone be expected to do this for free?

There are fee-only planners who strictly do the analysis for you, outline the problems, and propose generic (an answer with no specific company or product recommended) remedies to the question. This approach is preferred by some individuals. The feeling is that they are getting the most objective view of their affairs.
The problem with this method is that it’s generally unaffordable by the masses. Because of the amount of analysis that is required in the comprehensive financial planning process, it’s generally targeted to the six figure income individuals. Minimum fees may range from a low of $5,000 to a high of an equation of, or percentage of, your assets and income combined, taking into consideration investments held, business agreements that need reviewing, wills, trusts, etc.

I believe this to be the most expensive and unconventional way to go. Moreover, just because you make a lot of money doesn’t mean you have to go to this extent to find the right answers. You still generally are going to have commissions built into them.

*Disclosure: Information based on generally-available market data, including Internet sources.

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