The following are abstracts of actual conversations we have had with prospective clients at our complimentary first time personal consultations. If you find any of the topics particularly relevant to you, fell free to contact us to discuss the matter further.
- Do I need a financial planner?
This is one of the most common topics we discuss and really depends on what you are trying to accomplish. At Modular Financial Solutions, Inc. we specialize in working with individuals, families and small businesses to develop an approach that will enable you to achieve both your financial goals and life goals.
Almost everyone needs to do some financial planning. Topics like risk management, estate planning, cash flow management, retirement planning and investment management are far too important to take a "catch as catch can" approach. Snap decisions in these areas can result in needless complications and expensive mistakes later, when you may not be willing to confront the problem.
A popular misconception is that either you don't have enough money to worry about financial planning or you are so wealthy that financial planning will do you no good. This really is a rationalization for avoiding the issue. We all have important financial issues that need to be managed, regardless of your net worth.
The real question is how much of this work do you want to do yourself. Do you have the time and the detailed understanding of the issues involved to make an informed decision? Are you willing to take the time to become educated on the issues? Will you "stick with it"?
Financial planning is not a one-time job. It usually takes a concerted effort to manage your money most efficiently while at the same time allowing you to enjoy your life. If you are not willing to take the time to educate yourself and stay on top of your finances, if there are other things more important in your life, then you may want to work with a financial planner.
How Much Does Financial Planning Cost?
Surprisingly, this is one of the least frequently asked questions, but in terms of your own financial planning is extremely important. As a fee-only financial planning firm, we believe that cost is one of the most important issues you have to consider and one of the most difficult to understand. There are many, many ways to price financial planning, but the ultimate question is: How much am I paying and is it worth it?
With our fee-only financial planning approach, you always know exactly how much you are paying for a particular service. With other fee structures it is not so clear. Front loads, back loads, 12-b1 (advertising fees), trailer fees and other charges are usually hidden from the consumer and it is extremely difficult to precisely identify what your total fee is. Other fee structures such as percent of assets under management although not called sales commissions are essentially commissions since the amount charged has little connection to the actual work completed for you. It is important to realize that our fees are based upon the actual financial planning work we do for you, with no hidden sales commissions or third party "soft dollar" benefits.
Our fees range from $100 per hour for a specific question you may have about your finances, to a Financial Fitness Review which costs $500 and includes up to two hours of consultation and a general review of your finances. A complete Financial Assessment which is a detailed evaluation of your finances with an in depth written report typically ranges between $750 and $1,800, depending on your needs and usually requires between 15 and 30 hours of work. You decide how much help you need.
As part of our financial planning process we constantly seek to educate you on the financial planning issues most relevant to your situation and also provide you with written reports that describe in detail the results of our work. In thinking about financial planning fees here are a few questions you need to consider when trying to determine if it is "worth it."
- How much is it worth to you, to achieve your retirement goal-retire at age 55 for example.
- What is the value of receiving detailed information about your finances in a formal report that you can refer to at any time?
How valuable is the time you save by not having to do extensive research of financial products and services but rather let us do it for you?
Do I need a complete, comprehensive financial plan?
Our experience has shown that for most people, a comprehensive financial plan is usually not the best approach since it is usually expensive and almost before the ink is dry, it is out of date. Your situation can change instantly, which could completely change your financial plan.
Usually the answer to this question depends on the condition of your finances. Have you taken care of the basics such as risk management (medical, life, liability, disability and property insurance); have you set up an emergency fund; and do you have a clearly defined strategy for managing your investments; would your family be taken care of should something happen to you? All important questions that a comprehensive financial plan would address, but there is a better way.
We use a modular, or building block approach to financial planning that seeks to identify the most urgent issues you face, first, and then identify any options you have for resolving the issues and then recommending an approach that best fits your situation. With our modular approach we build a complete financial plan over time that is easily adaptable to your changing situation and more importantly addresses your most urgent issues first. As your situation changes, because of our modular approach, we can quickly identify any necessary adjustments to your financial planning approach and take the necessary steps to implement the adjustments.
I don't have much experience working with a financial planner and am concerned that I could be taken advantage of.
It can be difficult to find a true financial planner. There are many individuals who call themselves "financial planners" who are really sales people licensed at the state and federal level to sell a financial product. They typically work on commission or a percent of assets under management and do not provide financial planning services. They are not financial planners.
Financial planning consists of the evaluation and analysis of your financial situation to identify options you have and ultimately an approach to enable you to achieve your financial goals. The process will permit you to make informed decisions about financial products such as investments and insurance products, but you should realize the planning process "drives" the need for these products, and not the other way around.
One very important fact you should know is that only a Certified Financial Planner™ licensee, who is licensed by the Certified Financial Planner Board of Standards, Inc. (CFP Board) is regulated and is held accountable to the CFP Board's Code of Ethics for all financial planning activities. This CFP mark should be the minimum mark of competence in your search for a financial planner. This mark does not guarantee that you will find a "good" planner, only that there is a minimum level of competence to do financial planning. Mike Richardson, the President and founder of Modular Financial Solutions, Inc. has been a Certified Financial Planner™ licensee for fifteen years and is committed to the financial planning process.
The most effective way to choose a financial planner is to sit down and talk to them about your financial needs and goals and discuss the planner's approach and how business is conducted. You should carefully consider not only their credentials, but also their method of compensation, experience pertinent to your situation and their philosophy and implementation of the financial planning process. See the downloadable "Selecting a Qualified Financial Planner" Brochure on our web site for more details.
Ultimately if you cannot establish a level of trust with the planner, you should look elsewhere.
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CFP™, CERTIFIED FINANCIAL PLANNER™
and  are
marks owned by the Certified Financial Planner Board of Standards,
Inc. These marks are awarded to individuals who successfully
complete the CFP™ Board's initial and ongoing certification
requirements.
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