What Is Advice-Only Financial Planning and Is It Right for You?

Most Canadians associate financial advice with investing. You have money to invest, you find a financial advisor, and that advisor helps manage your portfolio while providing financial advice.

Advice-only financial planning works differently. An advice-only financial planner is paid directly by the client for advice. The planner does not need to manage the client’s investments or sell financial products to get paid.

That separation can work well for some people, particularly those who already have an investment advisor or portfolio manager they like, or those who manage their own investments. But it is not necessarily the right model for everyone.

What is advice-only financial planning?

Advice-only financial planning separates the financial planning function from the sale or management of investments and other financial products.

Instead of paying indirectly through investment fees or commissions, the client pays the planner directly. Depending on the planner and the work involved, that could mean an hourly fee, a fixed project fee, or an ongoing annual fee.

The planning itself can cover many areas, including:

• Retirement planning
• Cash flow and spending
• Income tax planning
• CPP and OAS decisions
• Pension decisions
• RRSP, RRIF, and TFSA strategies
• Insurance needs
• Estate planning
• Incorporation and business owner planning
• Investment risk and asset allocation

The planner’s role is to help the client make financial decisions, rather than sell products or manage investments.

Is advice-only financial planning the same as fee-only financial planning?

The terminology can be confusing. The term fee-only is used inconsistently in Canada. It may refer to someone paid directly for financial planning, but it is also sometimes used by investment advisors who charge a fee based on the assets they manage. Advice-only more clearly describes a professional who is paid for advice and does not sell products or manage investments.

The important question is not which label someone uses. It is how the planner gets paid and whether they receive compensation from other sources. In practice, clients are usually less concerned with the label than with understanding who is paying the planner and whether any other compensation arrangements exist.

A prospective client should understand whether the planner receives commissions, investment management fees, referral fees, or other compensation in addition to the fee being charged for financial planning. At Objective Financial Partners, our financial planning fees are paid directly by our clients. We do not manage investments or receive investment commissions.

What does an advice-only financial planner actually do?

Consider someone who is 60 and hoping to retire at 63. They might have $1.5 million in RRSPs, TFSAs, and non-registered investments, a workplace pension, a mortgage that will soon be paid off, and a portfolio manager they have worked with for years.

They may be perfectly happy with how their money is invested. Their questions might instead be:

• Can I afford to retire at 63?
• How much can I spend in retirement?
• Should I start CPP at 63 or wait until 70?
• When should I start OAS?
• Should I withdraw from my RRSP before I have to convert it to a RRIF?
• Which accounts should I draw from first?
• How will my taxes change after retirement?
• What happens if my spouse dies before me?
• How much might be left for our children?

Those are primarily financial planning questions, many of which form part of a detailed retirement plan. An advice-only financial planner may prepare projections, compare different scenarios, and make recommendations about those decisions, while the client’s portfolio manager continues managing the investments. The two professionals are doing different jobs.

The limits of advice-only financial planning

This depends on the planner’s registration and business model, but an advice-only financial planner does not manage investments or sell financial products.

At Objective Financial Partners, for example, we can discuss a client’s risk tolerance, asset allocation, and whether their investment strategy fits their financial plan. We do not recommend that a client buy or sell a particular stock, bond, ETF, or other security.

Someone who wants a professional to select investments, execute trades, and monitor or rebalance a portfolio needs an investment advisor or portfolio manager. Some clients prefer to obtain investment management and financial planning from the same firm, while others prefer to keep the two functions separate.

Can I keep my investment advisor and use an advice-only financial planner?

Yes. Many people assume hiring a financial planner means moving their investments, but that is not necessarily the case.

A financial plan may identify how much investment risk a client needs to take, when cash will be required, and how withdrawals should be structured. With the client’s permission, the portfolio manager can take that information into account when managing the investments. The planner and portfolio manager perform different but complementary roles.

Advice-only financial planning for DIY investors

Advice-only financial planning can be a natural fit for DIY investors. Someone may be comfortable building and rebalancing a diversified portfolio but still want help deciding when to start CPP, how much they can sustainably spend, or whether earlier RRSP withdrawals could reduce future tax.

Investment knowledge and financial planning knowledge are not the same thing. A DIY investor can continue making their own investment decisions while obtaining professional advice about how their portfolio, taxes, retirement income, and other financial decisions fit together.

How is advice-only financial planning different from investment management?

The easiest way to understand the difference is to look at what each service is intended to accomplish.

There can be overlap. Some investment advisors provide extensive financial planning, while others focus primarily on portfolio management. Financial planners also need to consider investments because expected returns, risk, and asset allocation affect whether a financial plan works.

Advice-only financial planning simply gives clients the option to purchase financial planning separately from investment management.

How much does advice-only financial planning cost?

Advice-only financial planning is not necessarily less expensive than other ways of obtaining financial advice, and it should not be confused with discount financial planning.

A relatively simple consultation may cost a few hundred dollars, while detailed retirement or comprehensive planning may cost several thousand dollars. More complicated situations involving corporations, pensions, multiple properties, cross-border considerations, or significant tax planning may cost more.

Fees can vary considerably between firms for what may appear, at first glance, to be the same service. One planner may provide a focused projection and meeting, while another engagement may involve extensive data review, scenario modelling, tax analysis, written recommendations, and coordination with a client’s other professionals.

A lower cost plan is not necessarily a worse plan, and a higher cost plan is not automatically better. The appropriate choice depends on the decisions involved and the depth of analysis required.

Objective Financial Partners is particularly well suited to more extensive planning engagements. Many of our clients have corporations, pensions, multiple investment accounts, significant tax considerations, cross-border issues, or several financial decisions that need to be evaluated together. Our team includes experienced financial planners and accountants with different areas of expertise. This allows us to look at interconnected planning issues together and draw on specialized expertise when an engagement requires it.

Our fees may therefore be higher than those charged by some individual planners or smaller firms. That does not mean every client needs our most extensive service. Someone with a straightforward question may be well served by a focused consultation or a lower-cost engagement elsewhere. The important comparison is not simply the price of the plan, but the scope of work, the planner’s experience, and the analysis and support included.

An investment advisor or portfolio manager may charge based on the amount of money being managed. That fee may include investment management as well as financial planning and other services. Simply comparing the two fees does not tell you which represents better value because the services may be different.

Book a complimentary introductory call to discuss your situation and whether a focused consultation, retirement plan, or broader financial planning engagement may be appropriate.

Who might benefit from advice-only financial planning?

Advice-only financial planning can make sense for people who want financial advice but do not need their planner to manage their investments.

This model may appeal to someone who:

• Already has an investment advisor or portfolio manager they are happy with
• Manages their own investments
• Is approaching retirement and wants a second opinion
• Has several financial decisions that need to be considered together
• Wants detailed tax and retirement projections
• Has a pension, corporation, rental properties, or other planning complexities
• Wants to pay directly for financial advice

It can also work well for someone who simply wants another perspective. Financial decisions can have consequences over many years, and sometimes a second set of eyes is useful even when a client already has other professional advisors.

Who might not need an advice-only financial planner?

Advice-only financial planning is not necessarily the right solution for everyone. Someone whose primary need is investment management may be better served by an investment advisor or portfolio manager. If that professional also provides the level of financial planning the client needs, there may be no reason to hire a separate planner.

Someone with a relatively simple financial situation may not need a comprehensive plan either. A focused consultation could be sufficient, or they may not need professional advice at all.

At Objective Financial Partners, our Pay-As-You-Go Consultations are intended for people with more focused questions, while our broader planning engagements are intended for situations requiring more extensive analysis.

The goal should not be to hire as many financial professionals as possible. It should be to identify the advice you actually need and determine the best way to get it.

When investment management is also needed

Some clients come to us without an investment advisor and later decide they would prefer professional portfolio management. They can choose their own investment professional or, if they would like help finding one, we can introduce them to portfolio managers we know well.

Objective Financial Partners does not receive commissions, referral fees, or other compensation from those portfolio managers. The client remains free to choose whether to manage their investments, keep an existing advisor, or work with someone new.

How does Objective Financial Partners provide advice-only financial planning?

Objective Financial Partners provides fee-only, advice-only financial planning to clients across Canada. Our planners work with clients on retirement, tax, cash flow, pensions, estate planning, and other financial decisions. We do not manage investment portfolios, so clients do not need to transfer their investments to work with us.

The amount of planning someone needs varies. A client with a specific question may need a brief consultation, while someone approaching retirement with several interconnected decisions may benefit from a more detailed retirement plan or comprehensive financial plan.

You can also learn more about our financial planners and their backgrounds on our website.

Frequently asked questions

Do advice-only financial planners manage investments?

No. An advice-only financial planner may provide guidance about investment risk, asset allocation, and how investments fit into a financial plan without selecting securities or managing the portfolio. Clients can use a separate investment professional or manage their own investments.

Can I keep my current financial advisor if I hire an advice-only financial planner?

Yes. Hiring an advice-only financial planner does not require you to move your investments or end an existing advisor relationship. The planner and investment professional can perform different, complementary roles.

How much does an advice-only financial planner cost?

Fees vary depending on the planner and the complexity of the work. A focused consultation may cost a few hundred dollars, while retirement or comprehensive financial planning may cost several thousand dollars. It is important to compare what is included as well as the price.

Is advice-only financial planning right for you?

Advice-only financial planning is one way to obtain financial advice. It is not inherently better or worse than receiving financial planning from the same professional or firm that manages your investments.

For someone who already has an investment professional they trust, it can provide additional planning without requiring them to move their assets. For a DIY investor, it can provide help with retirement, tax, and other decisions without giving up control of the portfolio. For someone who wants one professional or firm to manage investments and provide financial planning together, a more integrated model may make more sense.

The important thing is to understand what you are paying for and whether it matches the advice you actually need.

If you are considering advice-only financial planning and want to determine whether it makes sense for your situation, you can book a complimentary introductory call with one of our financial planners to discuss what you are looking for and how we may be able to help.