Financial planners not only manage your investments, but they’ll also give you advice on saving for retirement and for your kids’ college education. They can do estate planning and point you toward accountants who will prepare your taxes. They can discuss the wisdom of trading up to a bigger, more expensive house.
In Monterey, Calif., fee-only planner Gifford Lehman and his three associates manage $165 million for 75 clients. Lehman doesn’t require an asset minimum to become a client, but his fee structure works best for investors with at least $1 million. He charges between 0.5 percent and 1 percent of assets annually, depending on account size. That fee is on top of any underlying fees for the investments he chooses. In addition to the usual investing advice, Lehman offers estate and tax planning.
Just because a firm is big doesn’t mean it requires a big minimum. Edelman Financial Services, based in Fairfax, Va., has more than 17,000 clients, $8.5 billion in assets under management and offices in 14 states. Some planners at Edelman will accept accounts of as little as $75,000, but the fees will be 2 percent of assets per year, compared with 0.75 percent annually for an account of $1 million to $3 million.
Other big firms offer advice in small increments. Garrett Planning Network, a nationwide group of independent planners, can put you in touch with one of its more than 300 fee-only advisers, who charge hourly rates of $150 to $240 and can help on an as-needed or ongoing basis. Their target audience is beginners, middle-income earners and do-it-yourselfers. It typically takes eight to 12 hours to devise a comprehensive financial and investment plan.
Then there are brokers-turned-planners. Take John Burke: For 22 years, he was an adviser at big brokerage firms. Now, he’s a financial planner and has his own firm, Burke Financial Strategies, in Iselin, N.J. Instead of making money on commissions, as he once did, he earns a fee based on the assets he manages. And his clients get more than just investment advice — they get comprehensive financial planning, too. The firm is tied to the Raymond James brokerage, but Burke says he doesn’t earn commissions on products he sells. His fee is 1 percent of assets under management annually. He works with clients who have more than $1 million, but two associates in his office — one is a certified financial planner and the other is a certified public accountant — take on clients with $200,000 to $1 million in assets. “If you exclude people with less than $1 million, you exclude most of America,” says Burke.Nellie S. Huang is a senior associate editor at Kiplinger’s Personal Finance magazine. Send your questions and comments to moneypower@ kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.