We Sell No Products Whatsoever
At Objective Financial, our sole purpose is providing unbiased financial, tax and estate planning advice
Fee-Only, Advice-Only Financial Planning
Financial planning is the integration of all aspects of your family’s finances, including retirement, tax and estate planning, combined with investment and insurance strategies. True financial planning is a process, not a product.
It is important to note that Quebec is the only province that requires any training for someone to call themselves a financial planner. The title is not a regulated one. So be sure when you hire a financial planner that you are hiring a Certified Financial Planner (CFP).
Fee-only, advice-only financial planners are comprehensive advisers who can help you fit together all the different pieces of your financial puzzle and don’t sell any products whatsoever.
It is estimated there are 150 financial planners (individuals, not companies) providing fee-only, advice-only financial planning in Canada. In contrast, there are 18,000 Certified Financial Planners, 25,000 financial planners and 90,000 financial advisers in Canada.
That means about 1/6 of 1% of this country’s financial advisers provide fee-only, advice-only financial planning.
Even less are completely independent, selling only their advice (no product sales either) and even less still have obtained the extensive educational training to become Certified Financial Planners.
For most Canadians, investment advice is the only real financial advice they get. Even tax planning advice is elusive, given that most people’s accountants simply do their tax return and nothing more.
Fee-only, advice-only financial planning brings the integration of all areas of personal finance to the forefront and makes it the sole goal of the client-adviser relationship. True fee-only, advice-only financial planning ensures that the planner and their company are compensated solely by agreed-upon fees paid by the client. This means there are no hidden costs, third party financial motivations or kick-backs – the planner represents the client and only the client.
Objectivity is the name of the game, which is important in a global financial market that can be fraught with conflicts of interest.
Fee-only, advice-only financial planning should not be confused with fee-based investment management, where an investor pays an annual fee to their investment adviser based on a percentage of their investments. A fee-based approach is simply a way to pay your investment adviser.
Fee-only, advice-only financial planning keeps advice and potential products separate, so most clients who work with a fee-only, advice-only financial planner will also have a separate investment adviser and insurance agent.
Some people are reluctant to add another adviser to their repertoire. They already meet with their investment adviser in February to make their RRSP contribution. They meet with their accountant in April to get their income taxes completed. They have an insurance agent who has arranged their insurance policies. They have a lawyer who updates their wills and powers of attorney from time to time. The problem is, even though these various professionals may be great at what they do individually, collectively, there is often little or no integration of their recommendations.
Fee-only, advice-only financial planning fees are charged for comprehensive financial advice and are based on expertise required, complexity and time required. Fee-only, advice-only financial planners are professionals and charge their fees much like other professionals such as lawyers or accountants. The fees have nothing to do with a client’s income or assets, meaning every client is just as important as the next and that our advice is totally unbiased. This is in contrast to the traditional provision of financial or investment advice, where minimum investment levels apply and compensation is paid to the adviser based on product choices. It means fee-only, advice-only financial planning is accessible by anybody on a completely objective basis.
What’s the return on investment from working with a fee-only, advice-only financial adviser? It’s hard to say because we never know what we’re going to find under the hood until we get started. In many cases, there are explicit returns by achieving goals like better tax efficiency, for example, but most clients would also tout the implicit benefit of working with a trusted adviser with no conflicts of interest who can answer many of the questions that others cannot or will not.
What is the difference between an advice-only financial planner and a fee-based investment advisor?
The use of titles by financial professionals in Canada is not very well regulated. As a result, determining the difference between someone providing advice-only financial planning and fee-based investment services is difficult. But the differences are significant.
In the past, financial planners providing fee-for-service financial planning typically referred to themselves as fee-only financial planners. Consumers could easily identify them as being financial professionals who did not sell financial products like investments or insurance.
The media has provided a lot of positive attention for the fee-only industry in Canada over the years. However, as the practice of charging a fee as a percentage of assets under management for investment services has grown, so too has the number of advisors who refer to themselves as fee-only.
In fairness, an investment advisor who charges a fee of 1% of an investment portfolio is quite different from an advisor who charges commissions to buy and sell investment products. They too need to be distinguished from one another. But how does a consumer find an advisor who provides financial planning advice without managing their investments if more and more advisors are so-called fee-only?
An advice-only financial planner is a professional – ideally a Certified Financial Planner (CFP) – who provides financial planning advice to clients without managing their investments. If they receive a fee split, commission, referral fee, or any other compensation from an affiliated investment firm or insurance agency, I would argue that they are not advice-only. An advice-only financial planner is paid only for advice, like a lawyer. Their fees may be hourly or flat fee.
Advice-only financial planning generally involves guidance on a range of financial planning matters, including retirement planning, tax reduction, estate planning, investment strategy, and insurance needs.
By comparison, a fee-based investment advisor provides investment management services. They, or someone at their firm, may provide financial planning as well. Their fees are based on a percentage of an investor’s assets under management, and they manage a client’s investment portfolio, typically on a discretionary basis. The financial planning that they may provide is not free. There is a cost to provide financial planning to an investor and it may be factored into the fee as a percentage of assets under management. It may or may not be as comprehensive as the financial planning services provided by an advice-only financial planning firm.
We get approached by lots of investors who believe we can help manage their investments for an hourly fee or help them build an investment portfolio with a discount brokerage account. We cannot, nor can other advice-only financial planners. Likewise, we speak to plenty of people who have spent years trying to find someone to provide financial planning advice, for a fee, without managing their investments. Most have spoken to other “fee-only” advisors who they mistook for advice-only financial planners.
Choosing between an advice-only financial planner and a fee-based investment advisor depends on your needs and goals. Many clients of advice-only financial planners also work with a fee-based investment advisor. Many clients of advice-only financial planners are do-it-yourself investors or prefer to invest in other investments like rental real estate. Many clients of fee-based investment advisors are satisfied with the financial planning advice they receive from their investment firm, especially if their needs are simple.
Regardless, it is important for a consumer to know the difference between an advice- only financial planner and a fee-based investment advisor. Both could be a great fit for the right client. Title regulation has gained more attention in Canada and hopefully over time, consumers will be able to more easily identify the different services available.
To learn more about our advice-only financial planning services, click here, or contact us to see if and how we can help.
T. 416.691.8471
Toll Free. 1.855.691.8471
The purpose of this meeting is to understand your specific needs to determine if and how we can help. We then provide a quote for our services to be detailed in a written engagement letter that acts as our contract to you. Please note we cannot provide advice to you during this introductory meeting.
We work with many self-directed DIY investors. That said, we cannot provide investment recommendations for the purchase or sale of specific securities, nor can other fee-only/advice-only financial planners in Canada who are not licensed to manage your investments.
Please note our minimum consultation fee is $1,500 plus applicable sales tax. If you provide some information below and request it from us, we can provide a rough estimate on pricing prior to an introductory meeting.
Objective Financial Partners Inc.
675 Cochrane Drive
East Tower, 6th Floor
Markham, Ontario
L3R 0B8
T. 416.691.8471
Toll Free. 1.855.691.8471
Providing fee-only financial planning to clients in Toronto or worldwide via Zoom or Skype
Copyright © 2018 |Objective Financial Partners Inc. | All rights reserved.
We don't sell investments, so we're not going to tell you which stocks to buy and sell. However, we can build you a comprehensive and truly objective financial plan.
Please send email inquiries to info@objectivecfp.com