Financial planning for the Netflix generation: Expert money advice goes subscription


We could all use some help with our finances, but hiring a professional advisor can be daunting.

Some charge commissions and make money based on what investment products they sell their clients.

Others charge a flat fee, often thousands of dollars, for a full financial plan.

Then there are those who charge a percentage fee based on assets under management, or AUM. Under this pricing model, you turn over your investment accounts to an advisor who gets, say, 1 percent of the total to manage your investments.

But now a new pricing structure is gaining momentum among a new generation of financial advisors.

Think Netflix - a monthly subscription - but for money advice.

It’s a win-win, say advisors who offer subscription plans.

How it works

Subscription plans are an attractive alternative for those who are wary of commissions or who can’t afford to pay thousands of dollars upfront.

It’s a completely transparent system, said Michael Kay, a certified financial planner with Financial Life Focus in Livingston.

He said it allows him, as a planner, to eliminate the conflicts of interest - real or perceived - that can be an issue under an asset-based pricing model.

“Clients love it and understand it,” he said. “Clients know that we are focused on planning and whatever issues are important to them.”

Kay said his company is in its third year of a retainer pricing model. Clients pay a fixed fee that’s locked in for two years, and it covers all planning and investment services.

Michael Ciccone, a certified financial planner with Tradition in Summit, said subscription pricing allows him to work with a different set of clients.

“It allows us to better serve younger clients and the adult children or grandchildren of existing clients, as well as young professionals and emerging affluent clients,” he said. “It allows us to bill in a way that is easier to factor into a budget versus an expensive one-time financial plan – and ongoing planning better supports good outcomes.”

Ciccone said this pricing model is a great option for clients who have most of their wealth tied up in their employer’s 401(k) plan or company stock. It also works for business owners, start-up founders, or other situations where someone’s assets can’t be managed under a traditional asset-based model.

He said specific costs vary based on the details of the situation and service level, but they range from a one-time fee of between $800 and $2,500, depending on the level of planning needed, with a $100 to $200 monthly fee for ongoing planning.

Rick Taborda, a certified financial planner with LBT Wealth Management in Iselin, said the subscription service model is perfect for people who are just starting out, have no assets to manage, but need financial planning advice as they navigate life transitions such as getting married, buying a home or paying down student debt. Often, they are dealing with all three at the same time, he said.

He said subscriptions allow him to work with people “who desperately need financial planning advice but have been mostly ignored by the financial services industry.”

He charges a one-time $497 fee for five virtual meetings. By the end of the five meetings, clients have a basic financial plan they can implement themselves or they can sign up for a monthly subscription of $125 a month to get help with implementing the plan. That also allows the client to have someone who will make sure they stick with their plan and make adjustments as life happens.

“Usually with the clients I’ve been working with it’s less about investments and more about teaching them how to manage their cash flow and how to budget - strategizing on how to pay off student debt while saving to buy their first home,” he said.

Even the big guys like investment giant Charles Schwab are getting into the subscription service game.

The Schwab plan, called Schwab Intelligent Portfolios Premium, charges a one-time $300 initial planning fee. This covers the initial in-depth planning consultation and the development of a comprehensive financial plan, said Schwab spokeswoman Marianne Ahlmann.

Then there’s a $30 per month subscription that “provides unlimited access to planning professionals, an interactive digital plan, and planning tools,” she said.

“We’re committed to modernizing the investing experience to make it simpler, more transparent, and more accessible to reflect the needs and expectations of today’s consumers,” Ahlmann said. “Moving to a subscription-based model simplifies how clients pay for comprehensive professional guidance and financial planning in our digital advisory service.”

Michael Maye, a certified financial planner and certified public accountant with MJM Financial in Gillette, doesn’t offer subscription pricing, but he said he can see the value for certain investors.

He said the asset-based model doesn’t work for investors who have not yet accumulated enough assets to be managed.

“Many clients still need planning services regardless of the size of their portfolio,” Maye said. “Young professionals are a perfect example of this.”

Is it right for everyone?

As with anything, the devil is in the details, said Maye, who offers a flat fee for some clients while others use the asset-based model for wealth management services.

He said his concern about subscription pricing is whether clients really get personalized service under the subscription model.

“I would wonder whether the planning was really being provided in an integrated fashion or just answering the client’s specific questions rather than looking at it through the lens of their overall situation,” he said. “I have often found that a client’s real question may not be in fact their first question and that takes some probing to get to their real question.”


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