The Key Benefits of Working with a Fee-Only Financial Planner

Working with a financial professional can be an effective way to boost your financial confidence and take steps to secure your financial future. Yet just because someone calls themself a financial advisor doesn’t mean the advice they provide is in your best interest. Oftentimes, the quality of advice you receive directly relates to how your financial advisor is compensated. In this article, we’ll explore the potential benefits of working with a fee-only financial planner as opposed to a fee-based or commission-based advisor.

Consider the following benefits of working with a fee-only financial planner:

#1: Transparency & Objectivity

A fee-only financial planner charges one transparent fee for their services. For example, they may earn an hourly rate, flat fee, or percentage of assets under management (AUM).

Meanwhile, fee-only financial planners don’t receive any commissions from selling certain financial products or investments. This compensation structure helps to eliminate potential conflicts of interest, ensuring the advice you receive is objective and tailored to your unique financial needs.

In contrast, commission-based financial advisors earn commissions from selling financial products or making investment recommendations. This can incentivize them to recommend products that generate higher commissions rather than those best suited to their clients’ needs.

There are also fee-based advisors, who can earn a combination of client fees and commissions from selling products. These advisors may still provide valuable advice. However, the possibility of earning commissions can create conflicts of interest that cloud their objectivity.

#2: Fiduciary Responsibility

According to a recent report from Personal Capital, nearly half (48%) of Americans incorrectly believe that all financial advisors have a legal responsibility to act in their clients’ best interests. In fact, only fiduciary financial advisors have a legal and ethical duty to put their clients’ interests ahead of their own.

Fortunately, fee-only financial planners typically act as fiduciaries. Indeed, sales commissions can create conflicts of interest for commission-based and fee-based financial advisors. However, a fee-only model minimizes potential conflicts, allowing these advisors to make recommendations that are in their clients’ best interests.

This commitment to prioritizing clients’ needs and goals helps create a foundation of trust and transparency. This, in turn, can lead to more effective financial planning and better long-term outcomes.

#3: Comprehensive Financial Planning

A fee-only financial planner is more likely to address your complete financial picture by providing comprehensive financial planning services. Examples of these services include retirement planning, investment management, and tax and estate planning.

By considering all aspects of your financial life, fee-only financial planners can develop a cohesive plan that’s in line with your near-term financial needs and long-term goals.

In addition, many financial advisors—especially those who work for large firms—require their clients to accept their investment management services. Milestone Asset Management Group is an example of a fee-only financial planner that offers ongoing tax and retirement planning for do-it-yourself investors.

This flexibility allows our clients to benefit from our financial planning expertise, even if they prefer to manage their investments on their own.

#4: Personalized Financial Planning Strategies

A fee-only financial planner takes the time to understand your unique financial situation, goals, and risk tolerance before crafting a personalized plan. By taking a fiduciary approach, these advisors can develop customized strategies that address your needs and aspirations.

Meanwhile, commission- and fee-based advisors who don’t hold themselves to a fiduciary standard only need to make recommendations that they deem suitable for their clients. That means their recommendations may not be tailored to your unique financial situation, which can make it more difficult to achieve your goals.

#5: Long-Term Relationship and Ongoing Support

Lastly, working with a fee-only financial planner often leads to a long-term relationship. This gives you access to ongoing support as your financial needs evolve. As you progress through different stages of life, these financial advisors can help you adapt your plan, ensuring you remain on track to achieve your objectives.

On the other hand, financial advisors who earn commissions for selling certain products may take a more transactional approach to their relationships. And since these advisors may not take the time to understand your full financial picture before making recommendations, they’re less likely to anticipate your ongoing needs like a fee-only financial planner would.

Consider the Benefits of Working with a Fee-Only Financial Planner Like Milestone Asset Management Group

Working with a fee-only financial planner can help you confidently navigate the financial challenges and opportunities that arise throughout your lifetime. Moreover, delegating your financial planning needs to an advisor who puts your best interests first can give you greater peace of mind, knowing you’re taking the right steps to secure your financial future.

Milestone Asset Management Group is a fee-only financial planning firm committed to helping our clients achieve their financial goals. Our in-house team of financial planners, CPAs, and estate planning attorneys can help you develop a comprehensive financial plan that addresses the various aspects of your financial life.

To learn more about how we can help and see if we’re the right fit for your financial planning needs, please schedule an introductory call.