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Fee Based Financial Planners

I find the idea of fee based financial planners interesting.  Fee based planners charge a flat fee for investment advice, rather than commissions on the size of the investment portfolio.  Ideally, this makes them less biased.  Today’s article is a guest post from a fee based planner who’s writing’s I’ve enjoyed in the past.


Financial planning for regular people – those of us for whom the word phrase “can I afford to…” occurs frequently – has to start with how you’re really, actually spending your money, not just estimated numbers on a spreadsheet. How you spent your money last year is a pretty good indicator of how you’ll spend your money this year, and it is the only context in which a real-life financial plan makes sense.

How you spend your money every single day is the most relevant financial characteristic about you, and the one with the most power to effect change.

I remember the first meeting I ever had with someone I thought was a financial planner. It was…surprising. Transformative, even, because it set me on the path to starting my advice only practice. After a brief discussion of our goals, in which my husband and I declared debt reduction to be our number one goal, her advice was to increase our regular loan payment. Nothing about how we got into debt in the first place, and not a word about where we might find the money to make the increase.

Increasing our loan payment was like giving us a prescription to address a symptom, but not worrying about curing the actual illness.

My role as a planner is to first help you come to grips with how you’re spending your money, for good or ill. This sets the stage for the next step of the process, which is to plan your goals, or – to put it another way – to put a price tag on the kind of life you want to live, compare the cost against how you actually spend your money, and see if it fits. Often, the result of this goal planning work is that something has to give. Goals have to be adjusted, deferred, or given up on, or spending has to change.

Retirement is a unique goal, in many ways, since there are so many moving parts. My job is to project the income you can reasonably expect from the multiple streams – government benefits like CPP and OAS, defined benefit or contribution pension plans, old LIRAs kicking around, and personal savings in RRSPs and TFSAs – and identify the job those personal savings have to do to make up the difference between what you’ve got already, what you want, and when you want it.

For most Canadians, this means that we need to take a look at your investments. Given what we know they need to do for you between now and retirement, is it reasonable to expect that they’ll do it? The reality is that you can’t control or predict what the market will do, but you can control how much you pay to participate, your asset allocation, and your behaviour when things go south (or north, for that matter). I identify the relevant facts about your portfolio, but – because I don’t sell any investments – I can’t tell you what to buy or sell, although I can point you to some excellent, simple to understand resources.

The reality is that everyone comes to financial planning from a different starting point. Some have their cash flow under control, some are so far from retirement that the fine details matter less than the amount they should be saving, and some want to explore every possible detail of their financial lives through coaching on an hourly, ongoing basis. For that reason, my planning package fees are modular; for individuals, each component is $450, and can be combined with any other component that’s needed.

My goal for each engagement is that clients leave knowing exactly what they want their money to do for them, and with a clear, common-sense plan for the simplest, easiest way to do it.

Sandi Martin is an ex-banker who left the dark side to start Spring Personal Finance, a one woman fee only financial planning practice based in Gravenhurst, Ontario. She and her husband have three kids under five, none of whom are learning the words to ‘Fidelity Fiduciary Bank’ quickly enough. She takes her clients seriously, but not much else.

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