December 21, 2018




I was talking with an advisor who is considering raising her fees in 2019. She is feeling under compensated for the work she does for her clients. She is working to answer this question:



How much do I need to charge to feel well-compensated for my time?



The advisor in question was lamenting making only $100 per hour on what she estimated to be 16 hours of work in the first year working with a client. She felt as a CFP® she deserved to make more.


The answer is ultimately up to her and to her clientele, but here are a few things to consider:



1. If you are not a fee-only advisor, you should make 2-3 times as much money implementing the plan as doing the initial planning. Not every client will work out that way, but many/most will.


2. The first year might require 16 hours of work, but the following years won’t. If you start with a reasonable fee and keep it the same for renewal, you get a pay raise in the following years.


3. If you are using a calculation to determine your fee, your minimum is not your maximum fee, so your hourly rate would average out higher than that.



Our industry isn’t as straight-forward as other professional industries. CPAs and attorneys bill by the hour starting at $250, but they don’t make additional commissions and fees on their recommendations.


The future of advice may very well be a pure fee-only model, but I have some concerns about that model.


  • The hard part is NOT creating a plan or even giving advice. As we know, a robot can do that!

  • The hard part IS getting clients to take action on their financial plan. Whatever that action is: save more, pay-off debt, allocate investments, buy needed insurance, get an estate plan, stop giving money to their kids and on and on and on…


If advisors don’t have any incentive to get their hands dirty and follow through with implementation, our job will get easier, but I am not sure the client will be better off!


So, how much is enough? Only you can decide. I just encourage you to keep in mind that your job extends beyond the scope of generating recommendations and into the messy world of implementation. Make sure you keep the whole picture in mind!



Let’s talk about it! How are you charging? How would you like to be charging? What is fair? 

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