What does a fee-only financial planner do, exactly?

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Q. How do you make money, Jason, if you don’t sell any products? –Rob A. Your question is a good one that I get a lot, Rob—even from people in the industry. So let me explain. Something that I like to reinforce frequently is that I do not sell any financial products. I feel this is an important point to clarify so people do not wonder if I have a conflict of interest when they read my advice in articles and interviews. Some financial planners make money by selling products, like mutual funds or insurance. Those products may pay them upfront or ongoing commissions, or a combination of the two. Different products pay different commissions, and their advice may be influenced by the way they get paid. That is not to say their advice may not be good, but they may have conflicts of interest. Many consumers do not understand the difference between a financial planner, a financial advisor, or the many other financial titles that companies and individuals use to describe their role. Quebec is the only province where you need credentials to call yourself a financial planner. In other provinces and territories, anybody can represent themselves as a financial planner. Ontario is in the process of changing that—and it’s a change I welcome, being based in Ontario myself. I am a Certified Financial Planner, or CFP, which is the most recognized financial planning designation around the world. I would consider a financial planner to be more focused on the overall financial planning process—saving, debt repayment, tax and estate strategies, retirement—as opposed to a financial advisor specializing in just one aspect, like investments or insurance. I refer to myself as a fee-only financial planner, Rob, because I am compensated only by fees paid by my clients. I do not accept referral fees or commissions from third parties; this is a choice, not a requirement. My clients pay a project fee, an hourly fee, or an annual fee. I focus mostly on retirement planning and overall financial planning strategies, but I do different things for different clients. For example, this week, I have five client meetings:

Reviewing a retirement planning projection with a portfolio manager and a newly wedded couple in a second marriage who are approaching retirement and living in Northern Ontario. They are paying a one-time fee.
Discussing group benefits with a new employer and a potential first home purchase for a young, single client in Toronto. They have purchased a block of hours for financial planning services.
A meeting to review tax and investment strategies with an incorporated business owner in the Greater Toronto Area with an online business that sells worldwide. They pay an annual fee that includes tax preparation.
Reviewing a retirement plan with a young couple in Calgary who are considering the purchase of a vacation property and trying to set annual saving targets. They pay an annual fee that includes tax preparation.
Discussing investment, tax and estate strategy with a retired lawyer in his 80s who has a corporation, and children and grandchildren living in the U.S. They pay an annual fee.

The media has really talked up the appeal of fee-only financial planning over the past 20 years since I started my career. One problem in Canada is that since titles are not regulated, anyone can call themselves fee-only. There are lots of what I would consider fee-based investment advisors, who manage portfolios and charge a fee as a percentage of the assets, and who refer to themselves as fee-only as well. But, again, there is no regulation of titles, so there is no regulatory reason someone cannot call themselves fee-only. So it’s really tough for consumers to figure out who is who, what various financial professionals do, and how they get paid. Over the past 10 years, I have even started to use the term “advice-only,” because that differentiates things a bit more. I sell advice for a fee, and do not get paid by anyone other than clients. I have a lot of clients I work with year after year, as well as others I work with more sporadically. I feel really privileged to be able to practice this way and not have to sell financial products or take referral fees. I think there would be more fee-only financial planners if financial planners were considered professionals, like accountants or lawyers; instead planners are more commonly seen as salespeople. I also think consumers would be more inclined to pay financial planning fees directly if they understood the indirect costs of the embedded fees in financial products, and especially if they knew the difference between true financial planning and the most common individual component of investment management. The good news is the way financial professionals get paid is receiving more attention from consumers and regulators. Fee-only financial planning is becoming increasingly popular as well. Transparency is good for consumers, and the demand for it is good for young financial planners who want to sell professional advice for a fee. Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever. MORE FROM JASON HEATH:

About Jason Heath, CFP

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

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Comments Cancel reply

James Pradhan says:

September 21, 2020 at 1:43 pm

Hello Jason,
Thank you for your explanations on the fee based service. I deal with a bank financial advisor, so I believe the advisor must be getting some incentives when I buy certain products from the bank, am I right? If I’m right I believe there is a conflict of interest. Can you let me know what are your fees are. I am retired recently and I’m seeking unbias financial advice from such as yourself.
thank you,
Jim

Reply
1. Sandra E. Martin says:
  
  September 22, 2020 at 9:24 am
  
  Thanks for your comment, Jim. We’ve forwarded your query to Jason via email.
  
  Reply
Mari-Ann Russell says:

September 28, 2020 at 12:48 pm

Do fee only CFPs such as Jason work province specific or Canada wide?

Reply
1. Sandra E. Martin says:
  
  September 30, 2020 at 3:33 pm
  
  Hi Mari-Ann,
  We passed your question along to Jason, who responded that he has clients across Canada as well as internationally. So a client isn’t restricted to working with a CFP who is local. Hope that helps.
  
  Reply
R Bruce Eastwood says:

September 28, 2020 at 9:22 pm

Can Jason recommend any fee only advisors in Windsor Ontario?

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1. Sandra E. Martin says:
  
  September 30, 2020 at 3:30 pm
  
  Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
  
  Reply
Dave kisiloski says:

October 16, 2020 at 9:39 am

Hi Jason me and my wife are planning on retiring in the next year. We have a home in Markham, a business, a home in Florida, A fair amount in stocks. We are looking for some financial help please contact us. Thanks Dave

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1. MoneySense Editors says:
  
  November 12, 2020 at 11:17 am
  
  Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
  
  Reply
Joel Matthews says:

November 22, 2020 at 5:00 pm

Hi Jason,

Can you recommend fee-based advisors in the Calgary area?

Thank you

JM

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1. MoneySense Editors says:
  
  November 25, 2020 at 7:13 pm
  
  Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.
  
  Reply
Hans says:

December 6, 2020 at 12:03 am

Hello Jason, I did not even know fee based consulting was a thing. I would like to know if you will take me on as a client as I would like to purchase some hours of consulting.

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Tracy Parsons says:

April 2, 2021 at 7:38 am

My son is selling his home and looking for financial advice. He eventually wants to use some of the money to buy back in to real estate. Looking for advisor in London on

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