My husband and I are in our mid-50’s. We have saved and invested for years and want to have a CFP review where we are in regard to retirement, i.e. Should we save more, spend less or are we on track. My husband has been using Morningstar model, provided by his company to analyze our situation, we would like a second opinion. We do not want someone to invest for us, so we are interested in paying fee only services.
A CFP we met with will review our savings, taxes, pensions, goals, etc for $2,500 – $4,500. He runs the numbers, reviews where we are with us, then let’s us know how much we owe him to share his recommendations and plan. He then wants to put us on $1,500 year retainer.
We want to have checkups every few years, not pay a yearly retainer. We tried to narrow down the up front costs and he said we would probably be at the lower end, i.e. $2,500. We do not need to pay anything if we don’t want his advice once he reviews his plan with us. If we don’t go with the retainer, we would have to pay the upfront fees every few years to review our situation because things might have changed and he wasn’t following it on a year to year basis. We aren’t looking for free advice, but are we being unreasonable asking for exact up front fees and not wanting to pay a yearly retainer? We would love to know your thoughts about this fee schedule and retainers.
Terry Says: I understand your dilemma completely. Free advice is probably worth exactly what you pay for it! (And you’re getting this advice from me for free!) Good advice is worth paying for. But how will you know the advice is good until you get it?! My suggestion is to search for a fee-only Certified Financial Planner (CFP) at www.feeonly.org.
Then make several free first appointments — just as you did with this CFP. Ask questions and listen closely to the questions the planner asks of you. You should ask for references — of people in similar circumstances who will endorse their services. Then make a call to ask how happy people are with the service they get. And be sure to ask how much they charge, and on what basis — since none of these fee-only planners takes commissions on products they sell. And ask what products they use for investments, which mutual fund companies they use for their clients. And what would be the average annual cost of the typical investment portfolio, aside from their planning fee.
Why settle for the first CFP you meet. You’d spend far more time hunting for the “right dress” or a new car! Isn’t it worth doing a little comparison shopping for this most important purchase — advice on your entire financial future? Trust your instincts! Remember, this is YOUR money — and you really have to be involved in the process.