How much should I pay for planning advice?

Terry i have corresponded with you in the past about cfp fee only. i’m about to look seriously for one but i would like a price range of what a fee should be . my net worth is about 850,000.00 and my wife and i are 32. i dont know if that helps but i just dont want a cfp to come up with an arbatrary number and not know if its fair . what is an average fee and what would be an excessive fee your help would be greatly appreciated.

SAVAGE SAYS: That’s a great question — and let me say that it all depends on the services you are getting — and the way in which your planner is being compensated.

For example, if you are just looking for investment advice, then you could go to any of the major mutual fund companies (Fidelity, Vanguard, T. Rowe Price) and get it free (assuming an account with at least $50,000) — and your investments will cost very little. At the other end, you could go to a traditional stockbroker, pay commissions (which may be discounted), and get “advice” on what to buy and sell. I put that in quotes, because stockbrokers do not have the same fiduciary duty as registered investment advisors or certified financial planners. That is, they do not have the duty to reveal any conflicts to the client, nor to put the clients’ interest ahead of their own. (Of course, a good stockbroker — I was one,way back when! — will always fulfill the fiduciary standard I described!)

Or you could go to a brokerage firm and get a “wrap” account, where you pay a standard fee of? about 1 percent of your assets, and may not pay commissions on any trades. But since you could pay less than one-half of one percent in most Vanguard funds, unless you are getting great advice in your wrap account, I don’t recommend this direction.

You indicated that you wanted more than investment advice.? That’s where a Certified Financial Planner comes in. There are two types — those who charge commissions on the products they sell (insurance, securities, annuities, etc.) and those who only charge a flat fee — typically from $150 to $300/hour– or a flat fee for reviewing your entire financial situation and making? recommendations. That would depend on the complexity of your situation.

You can find Certified Financial Planners at www.cfpboard.org, and fee-only certified financial planners at www.feeonly.org.

One other thought. It’s your job to ASK how the planner is compensated — and you can feel free to do this when you are considering making an appointment. Just ask:? is it a set fee, or does the planner charge commissions on products, or a combination of both. Then ask what the typical fee is that is being charged to customers with your amount of assets, and whether that includes advice on estate planning, insurance, and taxes. The tougher and more knowledgeable you are, the less time you will waste!? Always check references. And, ask someone who is very wealthy who they use!? And ask for an introduction.