Did you ever stop to think about typical financial advising fees? It’s often tails- they-win, heads-you-loose. With rare exceptions, most firms charge either a percentage of assets or get commissions on products they sell. Both can be problematic.
You’d better really be certain that a commission-based person puts your best interest first. You can easily accomplish that by insisting they sign a document stating they will act as a fiduciary. If they won’t, ask yourself why. Fiduciaries, by law, must put clients’ interests first. Work with a non-fiduciary at your own risk! Click here to learn more.
Fee-based planners more commonly act as fiduciaries (beware of those who won’t), but typically for premium prices. Many charge 1, 2 or 3% or more of your assets each year. For many people, that can be hundreds of thousands of dollars over a lifetime. Is it worth it? Do you get your money’s worth?
Why should you pay double just because you have twice as much as your neighbor, especially if the work is about the same? The industry’s answer: they provide double the value to you. If you have $500,000 and make 10%, you make $50,000. Your neighbor with $250,000 only makes $25,000. However, if you lose money the advisor still charges the same. What’s up with that?
More importantly, and this shows the absurdity of financial advising fee structures, what would happen if the rest of society took the same approach? Consider this: Today I go to my auto mechanic, Jimmy, and learn my car needs new brakes. Jimmy tells me parts will be $350 and labor another $200 for a total of $550. What would happen if Jimmy (and all auto mechanics) calculated my cost based on worth? Jimmy might say that John’s car is worth about $15,000. Furthermore, Jimmy knows that John can’t fix his own car and that John uses his car to get to work each day. Using that logic, Jimmy charges me $5,000 saying it’s easily worth that to me given the alternatives of replacing the car or not going to work. No one would accept that from their auto mechanic, but from their financial advisor for some reason it’s okay.
Stewardship is different. We charge hourly or flat fees, never a percentage of assets. We sell no products. All we do is give advice for fees that are fair to both you and us. Client fees rarely exceed a few thousand dollars a year. Stewardship always acts as a fiduciary. Compare us against other financial advisors and decide for yourself.