With the fee-for-service model, you can customize service offerings for clients seeking advice who don’t (yet) have traditional portfolio assets to transfer to your firm’s custodian for full-time management. This approach allows you to engage these clients by charging a fee that’s covered through their monthly cash flow.
Much like the maintenance of a car ensures its longevity and optimal performance, financial planning demands both one-time and ongoing attention. We encourage fee-based advisors to view these as synonymous processes– because just as regular oil changes and the occasional new part keep a car running smoothly, both one-time and ongoing financial services are integral to securing and optimizing a client's financial health.
As an advisor, embracing this perspective allows for the delivery of services that you may currently be giving away for free while catering to the unique needs of each client. By offering both one-time and ongoing services, you can address immediate concerns while also establishing a framework for long-term success.
Here are some examples of one-time and ongoing services you can offer clients under the fee-for-service model:
Comprehensive Financial Plan: A thorough, all-encompassing financial plan is invaluable for clients at any stage of life. This service involves a deep dive into every aspect of their financial life, from budgeting and saving to retirement planning and estate considerations. It's a foundational service that sets the stage for long-term financial health.
Second Opinion Engagement: Many clients seek a second opinion on their current financial strategies, such as investment strategies or retirement distribution strategies. This service provides an objective review of their existing plans, offering reassurance or recommending necessary adjustments. It's particularly appealing to those who want to ensure their current advisor's advice aligns with their financial goals.
Student Loan Analysis: With student debt being a significant concern for many, a detailed student loan analysis can provide strategies for efficient repayment, potential refinancing, and integration of loan payments into a broader financial plan. This service is particularly valuable for younger clients or parents managing their children's education costs.
Portfolio Tax Efficiency Review: Tax efficiency is crucial for maximizing investment returns. A portfolio tax efficiency review assesses the tax impact of a client's investment strategies and identifies opportunities for tax loss harvesting, asset location optimization, and other tax-saving tactics.
Housing Decisions: Additional Home or Downsize: Clients facing decisions about purchasing additional properties or downsizing can benefit from a detailed financial analysis. This service helps them understand the implications of such moves on their overall financial plan, including affordability, mortgage options, and the impact on long-term goals.
Equity and Incentive Compensation Review: For clients with equity compensation, such as stock options or restricted stock units, understanding how to manage these assets is vital. This service provides strategies for optimizing the timing and tax implications of equity compensation, aligning it with broader financial objectives.
Insurance Assessment (Life, LTC, Disability, P&C): An insurance assessment ensures clients have adequate and appropriate coverage. This service reviews existing policies, identifies coverage gaps, and recommends adjustments to life, long-term care, disability, and property & casualty insurance.
Career Change: Career transitions often bring financial uncertainty. Whether it's a job change, retirement, or starting a business, this service helps clients navigate the financial implications, from managing cash flow during transitions to evaluating retirement plan rollovers and insurance needs.
Ongoing Financial Planning: Continuous financial planning support helps clients adapt to life changes and evolving goals. This service includes regular check-ins, plan updates, and proactive advice to address new financial challenges and opportunities.
Advising on Held-Away Accounts: You can provide more value to clients by monitoring and rebalancing 401(k), 403(b), and other held-away accounts. This ensures clients' entire financial picture is considered, optimizing their portfolio's effectiveness and alignment with their goals. If you have questions on how to bill on held-away accounts under the fee-for-service model, check out this blog.
Tax Planning: Proactive tax planning helps clients minimize tax liabilities and maximize after-tax income. This service involves strategies such as tax-efficient investing, retirement account optimization, and planning for significant financial events like selling a business or receiving an inheritance.
Estate Planning: Estate planning involves managing and preserving a client’s wealth for future generations. This includes creating strategies to transfer assets, minimize taxes, and ensure that client's wishes are honored and provide peace of mind for them and their families. Plans could encompass creating wills, establishing trusts, designating beneficiaries, and minimizing estate taxes.
Recurring Investment Performance Review: Regular investment performance reviews keep clients informed about their portfolio's progress. This service includes analyzing performance relative to benchmarks, assessing risk levels, and making adjustments as needed to stay on track with financial goals.
Annual Investment Income Reporting: Accurate and timely reporting of investment income is necessary for tax planning and compliance. This service provides clients with comprehensive reports on their investment income, simplifying tax preparation and ensuring they remain compliant with tax regulations.
Portfolio Allocation Review & Rebalancing: Periodic reviews and rebalancing of investment portfolios ensure alignment with clients' risk tolerance and financial goals. This service involves adjusting asset allocations based on market conditions, life changes, and evolving financial objectives.
Periodic Webinars & Live Education Events: Education is a cornerstone of financial empowerment. Offering periodic webinars and live events keeps clients informed about market trends, financial strategies, and other relevant topics. These sessions can also provide opportunities for client engagement and community building.
Employee Benefits Review: For clients with employer-provided benefits, a thorough review ensures they are maximizing these offerings. This service evaluates health insurance, retirement plans, stock options, and other benefits, integrating them into the overall financial plan.
Annual Insurance Coverage Review: Regular reviews of insurance coverage ensure clients maintain adequate protection as their lives change. This service assesses existing policies and recommends adjustments to life, health, disability, and property insurance as needed.
Now that you have read through that list, you might realize that you are already providing many of these services, albeit bundled under an existing AUM agreement.
Adopting the fee-for-service model allows you to build transparent, trust-based relationships with prospects who don’t yet have assets to manage but do have the monthly cash flow to pay for advice. This approach not only helps your clients achieve their financial goals but also creates a predictable stream of revenue for you. As these clients' financial situations improve, they are likely to become long-term clients, positioning you to manage their assets when they’re ready.