12 MIN READ
It’s easy for me to forget that not everyone knows what fee-only planning is all about. I get so lost in my wonderful world of XY Planning Network folks, that it often doesn’t feel like there even is a financial planning universe outside of my network. I love my fee-only planners—that’s why I chose to get involved with XYPN from the beginning, and am now their full-time business coach! But recently, I had an experience that shook up my world view, which is something I think we all could use every once in a while.
I had an informational interview with a young professional who recently started her career in the insurance world. She felt particularly stuck because she didn’t love insurance sales, and felt frustrated because she had a vague idea of what she’d rather be doing, but no idea how to get there. I prodded a little bit, and she started to describe her ideal career: She wanted to work with a specific target niche on getting their finances in order. She wasn’t sure that insurance was always the answer for them, but found that her insurance clients often needed additional financial help. They needed everything from cash flow management to guidance when it came to their retirement portfolios, and she so desperately wanted to help them without feeling the pressure to lock them into an insurance policy. At this point, I’m basically jumping up and down in my chair on the other end of the phone.
“Hey,” I said, “That exists. You can do that. It’s called fee-only financial planning.”
She was shocked. In her mind, she assumed that the insurance industry was the only option if she wanted to continue helping families with their finances without necessarily diving into intensive asset management. After overcoming the initial deflation that she wasn’t the first one to come up with this idea (don’t we all wish that to some extent?), she was elated. It was suddenly clear that there was an entire world of people with her same values, and she was ready to start pursuing that dream.
This conversation was both life-affirming and deeply alarming for me. It was life-affirming because it felt so unbelievably good to encourage a young professional to follow her passion, and to help her connect with a group of fee-only planners who I know will love, support, and cheer her on as she moves through her journey.
It was alarming because it dawned on me that there is a large group of people out there who have no idea that fee-only planning is an option.
These people feel caught in insurance sales, or maybe they’re consumers who have an innate distrust of anyone who claims to be a financial “planner.” I realized that even though I cheer on my fee-only peers all day every day, I don’t do very much work to spread the good gospel of fee-only in a way that’s accepting and open to industry professionals and consumers from all walks of life and experiences, mostly because I haven’t actively tried to get in front of them. I have a feeling that this describes many members of XYPN, and I wanted to put together a guide on why it’s important to keep talking about fee-only planning, where we can get involved, and how to go about it without alienating people or sounding like a crazed groupie (guilty as charged).
Not Everyone Is Involved in the Fee-Only World
The first thing I took from my experience with this incredible young woman was that not everyone is involved in the fee-only world. That’s not to say they’ve actively chosen to ignore it; they’re just not as involved as one can be. They don’t even know it exists. Or, if they do know that fee-only exists, they may view it as the unicorn career path. They know it’s tough to pursue, and aren’t sure how to break out of their stable careers to chase their dream of being a fee-only planner (or of being involved with a fee-only practice).
If we look to the consumer side of things, the same is true. Another conversation I recently had with a good friend of mine went like this:
Me: *finishing up an anecdote about a client* “And that’s why it’s so important to speak with a financial planner before you actually need them."
Him: “You’re absolutely right, I’m so glad I have a financial planner.”
Me: “You do? I didn’t realize! That’s fantastic!” (Insert more fairly typical enthusiasm around financial planning from yours truly)
Him: “Yes, our insurance agent at [insert company here] does a fantastic job.”
Me: “Wait, your insurance agent is your...financial planner?”
Queue me face-palming and wanting to shake him. But this was yet another wake up call. There are many people out there who are desperately in need of financial planning and have no idea that their insurance agent or broker may not be looking out for their best interest. It’s actually alarming to think about how many people are being sold insurance policies they likely don’t need because their agent receives a big, fat commission, or who are getting locked into specific investments because their “planner” is part of a broker without an open architecture. Between this conversation and the one I had with the young insurance industry woman, I realized it was time to talk about how we can continue to spread the word about fee-only.
Before we dive into this conversation, I want to take a moment to acknowledge the fact that we have come a long way. Back in the day, fee-only was a pipe dream. Organizations like NAPFA, FPA, XYPN, and ACP have truly fought the good fight to bring predatory financial planning practices to light, and to educate the public on conflicts of interest within the industry.
I’m in no way minimizing the work that the amazing leaders in our world of fee-only planning have done to start and maintain these ongoing conversations both within our industry and with the public. But just because they’ve done incredible work doesn’t mean we get to let the conversation stop. It’s our job to keep the fee-only flame alive. Let’s look at four ways we can all get involved with spreading the good news of fee-only in our own work and personal lives.
#1: Tell Your Own Story
Everyone has their “why” when it comes to being involved in the world of fee-only planning. I often find that telling your story and communicating why fee-only is so important to you is one of the best ways to get others on board (or at least interested). Mine started with my mom.
Warning: this story will make many fee-only advisors want to clutch their pearls and gasp in horror.
My dad passed away several years ago, and my immediate concern was that my mom wouldn’t have enough money to live on for the rest of her life. My dad was fairly young, as was she, and she had a lot of years ahead of her. I distinctly remember asking her if she’d be okay. In my head, I was trying to think through how my husband, Jay, and I would move her in with us and our three kids if she needed it. I was trying to think about whether we’d move her closer to us to care for her, and what our life and finances would look like if caring for her was something we’d need to start doing. I also remember the immense relief I felt when she said, “I think I’ll be fine. I have X amount of money that your dad left me.”
Let me tell you, my dad did good by her. He had saved all of his pennies and had left her with a more than healthy nest egg. He had also left her with his financial advisor, a man who he had worked with for a number of years. I immediately felt put at ease. He had obviously done his due diligence to take care of her. In fact, she had so much saved up that I almost laughed. Of course she was going to be okay—she was going to be great! And then I stopped worrying about it and continued to live my life.
It wasn’t until I started to help her with her finances a few years later that I saw what was going on. Her “advisor” had her in an asset allocation that didn’t make sense for a retired woman of her age and risk tolerance. Heck, it didn’t make sense for any human being with a pulse. She still had plenty of money, but the fees she was paying were absolutely outrageous. This vampire was draining my mom’s nest egg so quickly it made my head spin, and she had no idea what was going on. He absolutely wasn’t fee-only, and was taking home a nauseating commission through the different fees she was paying and the products he had her bought into. I felt sick.
I pulled her out of the situation and got her in with a fee-only planner from my network of colleagues. I never felt so thankful to be part of such an incredible community that was willing to rise to the occasion to help my mom, a widow who had been shamelessly taken advantage of.
That’s my story, and I know you have yours, too. I’m not saying that all advisors who aren’t fee-only are the same way that mom’s “advisor” was. But this happens all too often, and not enough people know that it could be happening to them or someone they care about.
#2: Be Honest
Honesty is always the best policy when it comes to talking about what you do. This ties into discussing your why. Don’t be afraid to speak up at conferences or networking events about what you do, how fee-only planning works, and why you believe it’s important. I’ve seen too many conversations happen where a fee-only advisor says, “I’m a financial planner,” and stops there. Don’t stop! Keep talking!
This might mean breaking out of your comfort zone sometimes. Another common conversation I see often takes place among advisors. When discussing what type of planning you do, or what your work looks like, an advisor might say they’re fee-only. Upon further discussion, it becomes apparent that Advisor A isn’t fee-only, but Advisor B is. Sometimes, Advisor A doesn’t even realize they aren’t fee-only. They consider fee-based and fee-only to be synonymous, or they’re new to the profession and have only worked for their large firm, broker, or wirehouse for a short time.
They’ve unknowingly been lying to people saying they’re fee-only, and honestly are proud that they’re one of the “good guys.” In this situation, be honest and forgiving. It’s easy to get riled up when you feel the fee-only world is being tarnished by someone who, well, isn’t. Speaking up and clarifying with them is always in everyone’s best interest.
In other situations, you may be dealing with an advisor who knows they’re not fee-only but have adopted the term anyways. This is, of course, different and can be treated differently than a conversation with a well-intentioned individual who has no idea they’re misusing the term. Be firm and honest. Don’t beat around the bush, even if confrontation is something you’re afraid of. Talk about what you do, what the true definition of fee-only is, and urge people to define themselves correctly.
#3: Get Involved
This is the most action-oriented item on your fee-only to do list: get involved. It’s up to us to spread the word about fee-only financial planning, and that means getting in front of people who don’t know the fee-only world is out there, ready and waiting for them with open arms. The question is, who can you talk to about this?Students
The first place I see that fee-only is truly not discussed is within the education world. High schoolers considering what they want to do with the rest of their lives, and college students who are studying financial planning, may not be fully aware of what fee-only means and how they can get involved. More importantly, they may believe that the only way to be part of the fee-only world is by starting their own firm, which a large percentage of financial planning students aren’t interested in doing for a wide variety of reasons. Talking to students about what fee-only is all about and the many different career paths they can pursue within this segment of the financial planning profession is key to getting the word out.
The Financial Planning Association
The Financial Planning Association (FPA) is consistently doing incredible work in the fee-only space. They’re fighting for transparency both within the finance industry and in consumer-facing publications and forums. If you aren’t already, I seriously suggest getting involved with FPA both on a national level and with your local chapter. You can even join FPA Activate, an exciting Facebook group that’s regularly starting discussions about fee-only work and how to break into the profession.
Local News Outlets
Have you ever wanted to see your name in print? Are you interested in doing a monthly segment with your local news station? Reach out! The worst case scenario is that they say “no.” The best case scenario is that they say “yes” and you have a fantastic new marketing opportunity and a great platform to talk about the importance of fee-only planning. Win-win.
Don’t be afraid to be vocal on social media about what it means to be fee-only. The more you can talk about it and reach a broader audience, the more people will feel comfortable coming to you with their questions about fee-only planning, or have the drive to research it for themselves. You never know how a single post can impact someone’s life. Even if it doesn’t mean a client for you, it does mean that someone out there will be able to recognize how to find a financial planner who has their best interest at heart. And that’s a win we can all celebrate.
#4: Rein In Judgement
It’s very easy to judge people who aren’t fee-only. We live in a world of advisors who are all so passionate about what they do, and who are so passionate about the fee-only business model. But for some advisors, fee-only isn’t a possibility right now. It can be expensive to break away from a broker, or to pursue the RIA path if they’re employed at a larger, non-fee-only firm. Being able to pursue this business model is amazing, but it’s also a privilege that some don’t have.
When you’re talking to a financial planner who isn’t fee-only, the conversation can get ugly. Sometimes, when you’re talking to someone who really is there for the money and is willing to take advantage of people to succeed, I understand how an argument can start. But other times, it’s in everyone’s best interest to keep the conversation educational, for both parties. The best thing you can do in these moments is realize you’re talking to a human being.
Even if they’re running a fee-based financial planning firm, or are somehow connected to a broker, you’ll be better served by asking, “Why is that?” rather than jumping to a negative conclusion. Do everything you can to learn what roadblocks they’re facing, and see if you can offer solutions to the obstacles preventing them from becoming fee-only. Sometimes it just takes a colleague who’s willing to listen, learn, and help strategize how to move to a fee-only model.
In short, check your judgement at the door until you have more information. You may be able to help more than you realize. Note: this isn’t a half bad strategy for any polarizing conversation in work and in life.
Why Is This Important?
When you’re part of team fee-only, you’re part of something that’s so much bigger than you. It’s so easy to get stuck in our ways, put on our handy dandy blinders, and only see the colleagues who are doing what we’re doing and who hold our same beliefs. This may be incredibly reaffirming and exciting, but it’s not very helpful at continuing to get the word out and help others see financial planning the way we do. In many ways, by becoming a fee-only planner, you sign on to picking up your battle gear and fighting to share your story and educate others as much as you can about conflicts of interest, bad planning practices, and more.
These conversations are happening all around us, but they aren’t happening frequently or loudly enough. Your voice, even on its own, can have a huge impact both on the people in your life you care about and colleagues who want to know more or who need encouragement to start their own journey toward fee-only. The conversations I’ve had recently in my own life with both my friend who was unsure of what their insurance agent’s role truly was and with the young woman I met who worked in insurance have opened my eyes to the huge gap in knowledge that exists for so many.
Just because I’m entrenched in the fee-only world doesn’t mean the average person has the same background, ideas, or education on the topic that I do. I know that, starting right now, I will work to talk more frequently and openly about fee-only (and I talk about it a lot already). I challenge you to start those conversations in your world, too.
About Arlene Moss, Executive Coach
Arlene gets a kick out of helping financial advisors get over being overwhelmed and take on their frustrations so their businesses soar. Arlene works to ensure XYPN members are able to help their clients prosper while creating a sustainable business model. Through XYPN Academy and one-on-one coaching, members get the support they need to grow their businesses and overcome the challenges that come their way.