Why expanding access to financial planning is crucial
When people work with a fitness trainer, they expect a workout tailored to their abilities and goals. Similarly, when they work with an architect to design a new home, they expect the plans to reflect their vision for the home and their personal financial capabilities for building it.
Similar expectations apply when working with a financial professional. As unique as each person’s financial situation and goals are, they deserve — and should expect — a financial professional to deliver services, strategies and recommendations tailored to their specific circumstances and priorities.
Everyone desires the means to live a financially secure life while achieving their goals. Many variables must factor into determining the best way to reach those goals. Given how much these factors can vary from individual to individual, a personalized approach to financial planning is far more likely to lead to positive outcomes, both now and in the future.
The problem today is that these critical financial planning services are largely reserved for those accumulating sizable assets. This is due to the prevalence of professionals being paid exclusively through assets under management or assets under advisement, which naturally reduces the availability of these services to those without significant assets.
I want to be clear that there is nothing wrong with charging fees or earning commissions based on assets. But if the profession is going to be more welcoming and inclusive, we must be willing to explore additional compensation models to increase financial planning’s accessibility and the peace of mind it provides.
We all have seen the studies and research that say financial health is as important as physical and mental health. This is why financial planning is so important, yet it seems inaccessible to those who need it.
Financial planning isn’t only for the wealthy. It’s a vital service that should be accessible to every American, regardless of their current asset levels. In short, financial planning should be comprehensive and not just about investments.
What to do about it
Consider offering alternative fee models, such as subscription, fixed fee and hourly, for your financial planning services. These models expand access due to their flexibility and lower cost barriers. Implementing alternative models can also attract a more diverse range of clients, including young business owners and emerging entrepreneurs who are on the cusp of building wealth through business liquidity events.
The Financial Planning Association is compensation-neutral and business model-agnostic because we believe financial planning can be delivered effectively through all models. If those professionals offering financial planning services are CFP professionals, the way they are compensated shouldn’t matter — except to the consumer. I offer these specific models only as potential pathways to increase access so more people can enjoy and benefit from the important work financial planners do.
Subscription models
From digital music and movies to clothing, meals, cosmetics and even automobiles, there’s a subscription service for many of today’s most in-demand products and services. And now, there are subscription services through which consumers can access professional financial planning expertise and guidance.
Subscription-based financial planning services are designed for people who prefer to pay a modest monthly fee to incrementally receive professional financial advice via a simple, fixed-cost package, with the opportunity to add “a la carte” products and services. Although subscriptions are not for everyone, they appeal to people who value flexibility, access, lower costs, and ongoing advice.
Fixed-fee hourly models
Fixed-fee hourly models allow clients to pay only for the specific time they need without committing to larger, ongoing fees that might not align with their current financial situation. This type of arrangement can particularly benefit those who may not require comprehensive, ongoing management but still desire guidance on specific financial matters, such as budgeting or retirement planning.
Clients can focus on specific areas of concern and receive actionable advice without the pressure of an ongoing agreement.
There is no one right model for every financial professional and consumer. At the end of the day, it is up to you to decide if expanding access to your services through alternative models is something you want to embrace and, ultimately, implement.
Financial planning should be considered an essential service, like health care or education, focused on promoting financial well-being rather than only a means of managing assets. By increasing accessibility, we can position financial planning as a powerful tool for achieving peace of mind and improved financial wellness.
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