In an industry swirling with various terms and definitions, it can be easy to develop a few misconceptions about what it means to work with a fee-only financial planner and the services they provide. Before clarifying some of the various myths, it is important to understand the definition of the term “fee-only”. According to NAPFA (National Association of Personal Financial Advisors), “a Fee-Only financial advisor [is] one who is compensated solely by the client with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product.”
The following are common myths regarding fee-only financial planners:
1. An advisor can be fee-only and still sell insurance.
False. By definition, the term “fee-only” means an advisor cannot receive a commission or any form of compensation from the purchase or sale of a financial product. In other words, a fee-only financial planner is paid by the client for the advice they give, not by product sales or commissions. An advisor can still make recommendations on the amount and type of insurance to purchase, but they can’t be the one to sell the product.
2. An advisor can work for a company that sells financial products but still personally be fee-only.
False. The definition of fee-only is applied at a firm level, not an individual level. Even if an advisor personally acts in a fee-only capacity, if any related party within their company has the ability to earn a commission no one may be deemed as a fee-only advisor.
3. An advisor or planner only gives advice on investing.
False. Often fee-only planners provide comprehensive financial planning, which encompasses various aspects of an individual’s financial foundation. In addition to investing, insurance, cash flow, retirement, estate planning, taxes, and life goals are taken into account.
4. Only wealthy individuals need a financial planner.
False. There are fee-only financial planning firms whose intent is to help clients meet their financial goals regardless of their income level or asset base. Sharkey, Howes & Javer is one of those firms, and individuals can gain a second opinion or plan specific to their situation without the pressure of a product sale.
Contact Sharkey, Howes & Javer at 303-639-5100 to schedule a complimentary meeting and learn more about working with a fee-only financial planner.