Using The Advice-Only Financial Planning Model To Build A Sustainable Advisory Firm

Using The Advice-Only Financial Planning Model To Build A Sustainable Advisory Firm

Traditionally, most financial advisory firms’ business models have been centered around managing their clients’ investment portfolios. Even for firms that offer comprehensive financial planning, investment management is often an important – and, for firms that charge fees on an AUM basis, required – part of the firm’s services. However, there is a segment of potential clients who are not interested in delegating their investment management responsibilities to an advisor, but who are seeking professional guidance on actions that they can take and implement on their own – providing an opportunity for advisors to build a sustainable business offering “Advice-Only” financial planning, without the investment management.

In this guest post, Cody Garrett, CFP – founder of Measure Twice Financial, an Advice-Only financial planning firm – writes about what it means to provide Advice-Only financial planning, the types of clients who engage with his services, how Advice-Only advisors get paid, and how to make it a sustainable business model. Additionally, Cody provides a template for a comprehensive Advice-Only financial planning process that he developed in the course of building his own practice.

Advice-Only financial planning generally serves clients who are comfortable performing investment management tasks on their own, but who have questions about their own situations and strategies that require more personalized advice than YouTube videos or personal finance websites can provide. With most advisory firms still requiring clients to give up control over their investments just to get ‘in the door’, advisors who provide personalized financial planning – while allowing the client to manage their own assets – are highly sought out by these “Do-It-Yourself” (but not “Learn-It-Yourself”) investors.

For advisors who offer Advice-Only planning, the sustainability of the model ultimately depends on how many clients the advisor can (or wants to) serve, and how much revenue from each client they can realize. But because their fees are tied to their advice rather than asset management, Advice-Only advisors can charge a level of fees that reflect the value of the advice that they give – meaning that, for advisors who can provide high-value financial advice to clients with complex needs (and charge fees commensurate with that value) the Advice-Only model can be not just sustainable, but can also give the advisor the flexibility to control both their schedule (since it is not dictated by the schedule tethered to the working hours of the financial markets) and their own income (which does not need to depend on their clients’ asset levels).

Ultimately, for advisors who are passionate about giving comprehensive financial advice – but less so about managing assets – Advice-Only planning is a way to serve clients whose needs align with the advisor’s own expertise and ability to provide value. And because so (relatively) few firms currently offer Advice-Only planning, the firms that do provide it can take advantage of the growing demand for Advice-Only planning to differentiate themselves from traditional AUM-based firms and build a sustainable, flexible advice-based practice!

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