Have you ever paid a bill … when you weren’t aware of what the cost was until you received the bill? This can lead to uncomfortable and strenuous interactions. It’s possible you won’t be able to unwind. You might be distracted and forget crucial information. You might be distracted by the clock to make sure you don’t run a minute over the time you have set.
Then you get the bill after which … Oh. The bill is higher than you anticipated or you didn’t get the value you expected from the price. I’ve seen this happen to doctors, lawyers … along with financial consultants.
DOING WHAT WE DO FOR YOU
Moving to one pricing and service structure, Financial Planning Fort Collins has made our worth evident. In the last four years, I’ve observed the incredible satisfaction that our Comprehensive Services clients are having when it comes to preparing and implementation of the financial plan they have. We’ve made a decision to be better at providing an excellent Comprehensive Services experience, and it starts with consistency in the way we work and the way we conduct ourselves.
I believe we’ve got one of the top model of service that can be found in the field of financial planning. We don’t just hand you a binder that is static and tell you, “Here you are! You now have to start implementing the financial strategy you’ve created.” Instead we provide concrete advice and recommendations and implement large components from beginning to end (think taxes, investments and estate planning) and offer assistance in the areas we aren’t able to implement directly.
Our approach is fantastic for retirees as well as accumulators. We understand that these stages have different requirements, and we’ve modified our procedures to accommodate both. I am extremelyexcited about where Financial Planning Fort Collins is taking!
Also, I’ve a unique affection for our past clients. You were a part of me in my first year as a fresh-faced college graduate nearly 20 years ago. You’ve gone through the transition after another along with me as I created this company and gathered an amazing partnership of associates. I’m sure Dan will say the same regarding his customers who have found a home in Financial Planning Fort Collins almost three years back.
I realize that the direction we’re headed won’t be for all. This is a bit bittersweet. I believe we can improve every financial plan of our clients however, I must be real about the way we work on the burden and work-life harmony in Comprehensive Services for each and every one of our customers needs.
THE PRICING PIECE
One of the principles that we adhere to in Comprehensive Services is simple fair and transparent pricing. We have our pricing written in simple English on our site. While we are making this transition I felt it was essential to break one of the most feared rules of financial services: talking about pricing.
Discussion of price in the field of financial services is not a popular topic because it’s believed to be detrimental to the business. If you’re not planning to pricing strategy that will undercut others and then give it away in a “free”* model the open sharing of information and discussions about prices will result in incorrect conclusion …, or as the theory seems to suggest.
*P.S. There is nothing free.
Let me take you through the different pricing models for financial services, discuss my thoughts on each and then explain the way the Comprehensive Services pricing works. It’s going to be a bit awkward, yes however, it’ll be revealing and I’ll relax knowing that we’re doing our best to live up to the simple, fair and clear ideal.
COMMISSIONS (WE DON’T CHARGE THEM)
This is the king of all financial service industry-related compensation. Prior to the invention of titles such as Financial Planner (and until to this day) numerous agents, brokers and advisors offered various financial instruments to customers to earn commissions. That’s how they were paid.
There’s nothing wrong in this. But, the cracks in a compensation system that is based on commissions only begin to show up in the form of real and potential conflicts of interests. Similar to the way a butcher tells you that you should take more meat, commissioned financial advisors will push you to purchase what they’re selling. If you’re looking for it then great! If not it’s not so great!
Based on what I believe to be obvious reasons, commission-based compensation is not compatible and incompatible with Comprehensive Services and Financial Planning Fort Collins and, more generally. We’re proud of our efforts in avoiding and minimizing conflicts of interests. Commissions are too long for us to construct.
FLAT FEE (WE THOUGHT ABOUT THIS, BUT IT DOESN’T SCALE)
On the other side of the spectrum can be flat-fees. When commissions represent yin flat fees are yin. A number of fee-only financial advisors and Financial Planners charge a flat fee. The fee isn’t subject to change for any particular situation or circumstance. I believe this is a good thing in many ways, but it can be difficult in some ways.
At the time that Comprehensive Services was first introduced I considered the idea of introducing the concept of a flat-rate fee. What I realized was that it would be difficult to cram clients with greater complexity at first, and on a regular basis into one fee that is unchangeable. I was aware that should we decide to provide a service that was scalable to the demands of our clients the idea of a flat-rate cost wouldn’t be effective in the long run.
VARIABLE FEES (WE’RE HERE … BUT WITH A BETTER APPROACH)
It’s a diverse pricing system. It’s probably the most widely employed, with everything from hourly charges and fees in proportion to the funds under management, to fixed-dollar fee which are adjusted to account for the complexity. Variable fees address the issues that the flat fee faces. If the requirements for the customer are complicated or challenging, or require more time from the Financial Planner or Financial Advisor The variation in the fee could be used to account for the different needs.
Comprehensive Services was initially priced in a flat-dollar however, it was a variable determined by the level of level of complexity. The process of communicating the cost for a more complex matter was extremely difficult. This is due to the fact that there aren’t many firms offering financial planning services that provide the level of transparency required to assess the appropriateness of their services and not in terms of the dollar-specific fee. Also, regardless of how many hours are put into and the value that comes from an Comprehensive Services relationship, it was never the right fit for potential clients. Learn and grow.
FEE-BASED (I.E., FEE AND COMMISSION — THE OPPOSITE OF LOW-CONFLICT AND UNBIASED)
I’d like to use a few words to explain a pricing system that I think is not just the most popular, but also one of the most misused that is fee basis pricing. Be sure to pay attention to that final part. Based. Based “fee” part means that the client is charged a fee for advice. “Based” refers to the fact that the advisor earns a commission if the client “based” part means that advisors also earn a commission if the client follows the recommendations.
Do you remember the butcher? Imagine paying them to tell that you eat a lot more meat, and later paid them back after you purchased the meat they sold you. It’s an extremely convenient method to cause problems and find solutions aren’t they?
Imagine a financial service firm. Every jingle, every commercial. The mutual company’s direction is to the left and up. the left. The other company has an amiable first and last names and a lot stores. The majority of the major Wall Street companies. You know them … all of them all utilize an underlying fee-based pricing system.
For the beginning of my professional career I was working in this manner. When I saw the light, I could not escape in a timely manner. It’s a bit perverse according to me.
HOW WE PRICE COMPREHENSIVE SERVICES AND WHY
If you’ve made it this to the end (I’m certain you’re prepared for the next section) Thank you for reading this far. It’s nice to learn about this, and I’m thankful for that. The backgroundon the price we charge to provide Comprehensive Services is about learning the things that work and what’s not -and also how we can offer the best service for affordable prices.
It all starts with a simple idea: The financial service sector in general is so adept in using the techniques and methods of concealing fees and commissions that barely anyone knows what the financial services they provide cost. If you learn that a company costs 1.5 percent for assets managed it doesn’t sound like $15,000 per $1,000,000 worth of the assets that are managed. Yet, they’re exactlythe identical.
The second time I suggested a flat rate to a potential client to offer Comprehensive Services — which included the administration of a portfolio of investments worth $2,000,000 and the management of a multi-state income tax scenario I have learned this lesson by trial and error.
Although the prospective client was able to pay more than $20,000 for comparable offerings (across two providers) my estimate would be “too expensive.” All of the worth that we’d add through the combination of strategy and service wasn’t enough to get past the barrier of the dollar-stated, not an amount, or percentage.
Perhaps we didn’t get the entire knowledge, yet we certainly repeated it. To keep things easy we charge Comprehensive Services for a single one-time fee. It’s a method of separating the financial planning portion (what we actually charge an amount to) and the that we include investments management (up to $1,000,000)) along with tax prep.
The main difference between now and last year is that we have introduced a method to scale up based on more funds under management. If you are looking for our help managing your portfolio of investments that is greater than $1,000,000, we’ll be able to do it at the cost of a extremely reasonable cost. Our values are directly in line to our financial plan. However, the reality of running a company that has to manage life savings makes the addition of this cost for managing the additional investments required.
In cases of an extraordinary amount of complex — as well as usually in cases where we can also provide significant value to the client, we will be able to adjust our minimal fee to accommodate the complexity. For the sake of being fair we will still provide investment management in the amount that is calculated to the adjusted fee. It is also because investment management isn’t the most valuable aspect we perform. Planning for financials is by far the best component. We charge for financial planning, and also include the management of investments and tax preparation.
You’ve got it. It’s so clear I feel like I’m naked. I hope you’ve enjoyed this knowledge. We’re doing something very awesome in Financial Planning Fort Collins. We thank you for being a part of our adventure and thank you for letting us be a part of it.
