How much for a Fee Only CFP

jessbiddleJuly 19, 2007

Hi all,

I'm relatively knowledgable about investing since I work in a related field, but I don't know anything about tax planning, estate planning etc. I'm interested in getting a fee only CFP but I have no idea how much this is? Does anyone have any idea (I live in Mass). Or how often you see them etc?


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Some charge (I think) a flat fee. Ours charges 1% of our account total.
We see him whenever we need to. Some questions can be resolved via email, but anytime we want, we call and set up an appt. (We live in WA state)

    Bookmark   July 20, 2007 at 12:07AM
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They charge whatever they can. They prefer a asset-based relationship such as zone_8grandma has, but you can find many CFPs who will work on an hourly basis for you. But there is no CFP unionizing, so theres no set hourly rate. YouÂll just have to call around and see what pros in your area are charging.

Go to the Financial Planning Association website and you can search for assistance. At the top RH of the screen there's a link called "Find a Planner". It's been a while since I went through the process, so I don't remember if you can search for fee-based vs asset-based planners.

If not, find a planner who accepts your portfolio size (most have minimums) and call them to ask if they can recommend someone to you. Most CFPs are happy to try to help you find the right planner for your situation.

Tax planning is done by your tax advisor, not an estate planner. Estate planning fees can range from $500+ for a computer-based "plug in the numbers" plan, to the totally customized report produced by a CFP I worked for last year, for which she charged anywhere from $4K to $9K, depending on the complexity.

After helping her produce those customized estate plans for the 18 months I worked at an independent (asset based only) CFP office, I'd have to say there was no comparison between the software stuff versus the incredibly detailed, comprehensive overview and recommendations produced by four weeks of reading every single word of every one of your financial/legal/insurance documents that the CFP had to wade through.

Now, if your estate isn't complicated, you could make do with a decent software produced estate plan in the $1-2K range. Just remember, however, that these are all based on data you provide.

A CFP and an estate lawyer are needed for estate planning. The CFP gives you the map for getting where you want to go - their recommendations are your instructions to carry out. The estate lawyer creates the nice tight legal package you need, which is usually a flat fee package.

A good estate plan is a map: where are you, and how will you get to your goal? WHAT YOUR GOAL IS, MUST BE DEFINED BY YOU.

This is the single biggest thing most people need from talking to a financial planner - they really must identify what their ultimate goals are. Too often it's a vague, "I'd like to retire early but want to send my three kids to college and graduate school too; oh, and I need a new car and want to buy a bigger house."

There were people who got offended when the CFP would look at their finances and tell them there was no way they were going to retire early, due to the double whammy of not enough savings and too-lavish spending.

It isnÂt unusual for clients to make the CFPÂs minimums, and then ten years later end up broke because they wouldnÂt listen to the CFP telling them they needed to stop drawing down their money so fast.

My boss was fond of saying that half the clients had to be encouraged to spend money, and the other half had to be prevented from spending themselves into poverty.

How often do you meet? ThatÂs an individual thing. You can figure that an asset-based relationship will cost you between 1% to 1.75% of your portfolio (the less you have to invest, the more you pay).

So do the math: 1% of $250K would be $2500/yr youÂd pay in an asset-based relationship (realistically it would be a higher percentage/cost, but letÂs use 1% because itÂs easier to figure).

In that year, you could meet with the CFP as many times as you want, for as long as you need. If it takes four hours to explain ETFs and their tax consequences to your situation, the CFP will take the time for you. If you want advice on whether to take advantage of the new variable annuity 401k option your employer just started offering, theyÂll run the numbers for you in different scenarios so you can tell whatÂll work best for you.

Most people wanted quarterly visits, after they received their quarterly investment reports. Those visits generally lasted 1-2 hours. If it was a family trust with multiple siblings, it wasnÂt unusual for those visits to be more like 3-4 hours or more.

The advantage of asset based vs fee based was that clients (at least where I worked) received an incredibly comprehensive financial service that coordinated tax planning, insurance, estate planning and legal services to make the transfer of assets, whether from a lifestyle change like retirement, or a death transfer to heirs, as easy as possible.

What you will need depends on your individual situation. But honestly, I think most people need an asset-based relationship  they just donÂt have enough knowledge to coordinate all the different and crucial details involved in transfering assets, unless they have someone they can depend upon.

I hope you find someone good that you will be able to build a relationship with, whether fee- or asset-based. Best of luck to you.

    Bookmark   July 20, 2007 at 2:11AM
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What jkom said. I do want to emphasize her last point. Talk to as many candidates as you can, but make sure that you feel comfortable with the one you select. You need to be absolutely comfortable asking questions, asking for explanations in lay terms; you need to be comfortable enough to be totally honest. And you need to have enough confidence in them to follow through on their suggestions.

I'm not looking forward to the day when our guy retires and we have to find someone else. He'll probably offer suggestions, though.

    Bookmark   July 20, 2007 at 9:49AM
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Susan Kaplan on Boston based WTKK 96.9 FM radio Sunday mornings from 9-12 am. Very informative and advises people who call in how to get the best return on their investments, which funds to buy and which to stay away from.The best thing it costs you nothing.She just told somebody who has a CFP that she can do everything he is doing on their own with her help and not pay a fee for a CFP. Sounds better than spending money for a planner when it is not needed. BTW her portfolio was in excess of 275 gs.

    Bookmark   July 22, 2007 at 11:17AM
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I'd take ANYTHING said by a radio talk host with a grain of salt. How much did Susan Kaplan actually know about the caller when she said that?

"Free" advice is pretty much worth what you pay for it.

    Bookmark   July 22, 2007 at 1:31PM
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The OP isn't asking for financial planning help - s/he states that upfront. OP is looking for estate planning and tax planning (I assume estate tax questions).

As I've posted before in other threads, people who are INTERESTED in managing their own investments and WILLING to do the considerable legal and financial work to set things up properly so that one's estate can be transferred relatively intact to one's heirs, may not need a CFP and can make do with just a good estate lawyer.

However, the great majority of people suck at managing their investment portfolio. That's the truth of it. They aren't interested, don't research properly, then follow every media-hyped trend which means they're always missing a rising market and hanging on to a losing one.

I cant tell you how many people kept insisting to me during the years 2002-2005 that "you just cant lose money in real estate the way you can in the stock market."

Oh yeah? Wonder what theyre thinking now?

My husband belongs to PERS, the largest retirement fund in the world. They run extremely good, free, regular retirement planning workshops and classes. Statistics from PERS show the vast majority of employees keep 65% of their retirement funds in bonds. Mind you, this isn't retired employees - this is ACTIVELY working employees.

Why? Because it's "safe" and they don't have to think about portfolio diversification and actively managing their assets. Because theyre scared and ignorant about how to invest properly, and dont know who to ask.

I do my DHs investing and do a darn good job of it on my own. In 20 yrs Ive tripled his personal and company contributions. Even so, this year I used a professional CFP for advice on how to further diversify the portfolio, because I dont expect to repeat the stellar performance we got in 2006.

However, to handle my MILs taxable $1M accounts, I took her to a CFPs firm after we got her legal affairs in order. If anything happens to us, I need her to have someone reliable, expert, and who has fiduciary (legal) responsibility to handle her accounts properly.

The last is the most important. A stockbroker has no fiduciary responsibility to a client. A lot of people have gotten in trouble and lost hard-earned money because they dont understand this one critical point. A broker is a salesperson, and thats exactly what his advice is worth. To him, youre a commission. If youre lucky, you can find a good one; they do exist. Trouble is, how would you judge? Most folks cant.

And for what its worth, $250K is not a large portfolio. At a 5% drawdown for retirement it would give you $12,500 a year. Even assuming Social Security I dont know too many people who could live on that sum.

    Bookmark   July 23, 2007 at 12:04AM
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We've recently interviewed a CFP and he charges $150/hr. For a comprehensive plan he sets a cap that he would not go over. I found another online for the exact same price. We are in Kansas City.

    Bookmark   July 28, 2007 at 9:50AM
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I use a local woman who is part of the LPL network (see the description below.) She charges by the hour, and also charges a percentage for asset management. But I don't use her as an asset manager - just on an hourly basis for this and that - $150 an hour. My CPA referred her initially and I've learned a lot from her.

"Linsco/Private Ledger (LPL Financial Services) is the nation's leading independent brokerage firm* without proprietary investment products. Through a national network of over 6,200 advisors, LPL provides its clients investment advice and access to products from many of the nation's "leading" investment companies. LPL Financial Advisors own and operate their own businesses and help individual and institutional investors meet their financial goals."

    Bookmark   August 6, 2007 at 6:59PM
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