It can be extremely challenging to find a competent financial advisor who is willing to be compensated solely on an hourly fee basis, similar to how lawyers are paid. Even if you are willing to pay a substantial hourly rate, it seems that there are very few takers for this type of arrangement. But why is this the case? And how can you go about finding a good financial advisor who is open to working under such terms?
The Dominance of the Assets-under-Management Model
According to industry professionals, it is not surprising that financial advisors are reluctant to adopt the hourly model or offer hourly fees. The prevalence of the assets-under-management model is one of the main reasons behind this trend. Chris Russell, a certified financial analyst at Tempus Pecunia, explains that many advisors prefer to have long-term clients rather than taking on one-off hourly projects. Additionally, the amount of time required for data intake and initial fact-finding to build a comprehensive financial plan makes an hourly rate less appealing or impractical for many financial advisors.
Is There Still Hope?
Despite the challenges, it is still possible to find a skilled financial advisor who is willing to work on an hourly basis. The key lies in knowing where and how to search for such professionals.
If you are looking for a new financial advisor and need assistance in finding the right fit for your needs, there are tools available that can help match you with potential advisors. These tools can simplify your search process and increase your chances of finding an advisor who is open to alternative compensation arrangements.
Finding a financial advisor who is willing to work exclusively on an hourly fee basis may require some extra effort and research, but with the right approach, it is possible to find someone who aligns with your preferences and financial goals.
How to Find an Hourly Financial Adviser
When searching for an hourly financial adviser, experts recommend checking out sites like XY Planning Network and Garrett Planning Network. Once you find potential advisers, it’s a good idea to visit their websites to gather information about their fees. Kaleb Paddock, from Ten Talents Financial Planning, suggests looking for advisers who offer a one-time flat fee to start the relationship and then charge hourly for future assistance. If you’re in need of a new financial adviser, there is a helpful tool available that can match you with someone who meets your specific needs.
The Assets-Under-Management Model
If you prefer working with an adviser who follows the assets-under-management model, there may still be options for obtaining hourly services. Dennis O’Brien, a fee-only adviser registered with NAPFA, often takes on hourly projects with clients on a one-time basis. These projects typically involve answering questions and providing guidance on various areas of financial planning.
What to Expect in Terms of Fees
Hourly financial adviser rates can vary, but they generally range between $200 and $500 per hour. Some advisers may offer a hybrid payment structure as well. For instance, Kaleb Paddock has an hourly rate of $350. However, if a client brings a significant project to him, he may propose a flat engagement fee for three months, which typically falls between $4,800 and $6,400. After the initial engagement, hourly fees are charged for quarterly check-in meetings. Keep in mind that fees are often negotiable.
By following these tips and understanding the potential costs involved, you can find an hourly financial adviser who suits your needs and budget.
Looking for a New Financial Adviser?
Published in 2022
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