Bringing Financial Planning to All

In my first position as a financial advisor, I worked at a “Broker Dealer”, where we charged commissions on the sale of products.  As an educator in my previous career, the sales aspect of the job was challenging and at odds with my belief that good financial planning encompasses much more than just which funds or securities to buy.  Any investor in a transactional account is bound wonder from time to time if a trade is being suggested to improve their portfolio, or because the broker needs to make a sale.

In order to focus on a more holistic approach, in 2012, I joined a Registered Investment Advisor (RIA), a firm which did not charge commissions on the sale of investments, but charged a management fee based on the assets under management.  I think this is a much better solution for both investors and advisors.  It’s completely transparent and the client pays for on-going service, rather than upfront commissions.  This eliminates feeling like you have to stay on guard to make sure a broker is not placing unnecessary trades to make more revenue for their firm. A fee-based account places investors and advisors on the same side: if the portfolio goes up in value, the advisor will make more, and if the portfolio declines, so will the advisor’s compensation.

While the RIA approach has many advantages over the commission platform, as a business model, it is difficult to spend a great deal of time on a client with limited assets as the revenue is low and it might take years to justify the initial time and costs.  As a result, most RIA firms have minimum account sizes, often $1 million or more; at my previous firm, we did not take any clients under this level.  It was a good business model for the firm, and it gave me the chance to focus extensively on investment research, developing portfolio models, and implementing trades across $375 million in client assets.

However, I found it frustrating to have to turn away friends and family who wanted to use my services.  I believe in the American dream of financial independence.  I want to help others achieve those dreams and not limit my efforts to solely helping those who have already accomplished their financial goals.

That’s why we created a two-part structure at Good Life Wealth Management – to have the ability to help clients of all sizes and ages.  Here’s how it works:

Families with over $250,000 in investable assets will participate in our comprehensive Good Life Wealth Management Program.  This includes creating a financial plan and customized management of your assets in a tax-efficient investment portfolio.  The fee is 1% annually, (charged quarterly).  This approach provides established investors with an ongoing financial plan that addresses your unique needs and changes as your situation requires.

For families below $250,000, we offer our innovative Wealth Builder Program.  We create the financial plan you need today, with a focus on improving both sides of your net worth statement: your assets and your liabilities.  We invest your accounts using no-transaction fee funds or ETFs, and will advise how to allocate your other accounts such as 401(k)s.  Rather than charging as a percentage of your accounts, the Wealth Builder Program costs just $200 a month, which can be paid by credit card or debited directly from your accounts.

Using a monthly retainer is a relatively new approach in the RIA business, but I think is the crucial next step we need to bring the benefits of financial planning to the 90% of Americans currently not being served by the “$1 million and up” firms.

For more information on this approach, check out this article in October’s Think Advisor magazine, which quotes myself and other advisors who are leading and advocating for this change in the industry.  Here’s the link:

http://www.thinkadvisor.com/2014/09/29/experimenting-with-new-compensation-models