It is incredible how many retirees and pre-retirees come to us seeking an hourly financial advisor.
They place great emphasis on managing their own finances and are only seeking a Fee-Only Hourly Financial Advisor who is also a Fiduciary.
It is surprising how difficult it is for them to find a CFP® who possesses all three characteristics. The reality is that we are a “rare breed in this industry.”
They arrive saying, “I don’t want you to manage my portfolio; I’m tired of all the advisors wanting to manage my assets or sell me something I don’t want. That’s why I’m here, because you offer what I’m looking for. I just want an expert second opinion.”
And we respect that deeply. The vast majority are looking for specific strategies for:
- Required Minimum Distributions (RMD)
- Roth Conversions
- Review of your retirement accounts (401k, IRA, and Roth IRA)
- Tax Planning
- Portfolio Review
- Employee Benefits
Why is it so hard to find us?
The traditional industry model is designed for the advisor to charge a percentage of what you have saved. This creates an immediate conflict of interest: if you only need an hour of expert advice, it’s “not convenient” for them to help you.
Beyond the Fiduciary Label: What You Need to Know.
There is a question that everyone thinks makes them safe when choosing a financial advisor, but it might not be as foolproof as you think: “Are you a fiduciary financial advisor?”
It is very true that asking your advisor whether they follow the fiduciary standard adds an important layer of protection to your finances, ensuring that they act in your best interests. Now, let’s go a step further.
In the United States, at the time of writing this blog, there were more than 107,000 Certified Financial Planners.
According to the rules they must follow, they must abide by the fiduciary standard and ensure the client’s interest comes before the advisor’s. This tells us that by working with a CFP®, you are getting a fiduciary advisor.
A Conflict of Interest You Might Not See
So, the real problem is that not all fiduciaries look solely after your interests, but also their own. I know this might sound a bit contradictory, so let’s dive deeper into this matter.
Of those 107,000 CFPs, it is estimated that between 94% and 96% are Fee-Based. Remember, this means they receive commissions or incentives for product sales.
This makes one wonder: is the advisor doing what is best for me, or, in some cases, perhaps what is best for the financial group they work for, or their own pocket?
This opens the door to conflicts of interest, where you, as a client, might wonder whether the advisor is genuinely reviewing everything available in the market or whether they are offering a specific service or product because they receive a higher bonus or incentive.
Seeing this, you might be wondering: “Do advisors even exist who are fiduciaries and have no conflicts of interest?”
The good news is that they do, and they are called Fee-Only. This means they do not receive commissions or incentives from third parties, allowing them to make decisions in your best interest.
We could say that you are truly their boss because all their income comes directly from the clients they serve.
A Real-Life Example: The “Pure Fiduciary” Difference
The Conversation: A Client’s Retirement Concerns
The other day, I was assisting a client who was very worried because he didn’t know if he could truly retire without running out of money halfway through. In the middle of the free introductory interview to learn more about his finances, I asked him, “Do you have a financial advisor?” He said yes and that his advisor was a fiduciary.
The Fiduciary Myth: Fee-Only vs. Fee-Based
I replied that it was excellent to have a fiduciary advisor and asked whether his advisor was Fee-Only or Fee-Based. I explained the differences, and he said he couldn’t really tell, but he assumed he was Fee-Only because he worked for one of the major investment banks in the country.
The Reality of Big Bank Incentives
I was able to tell him immediately: “If your advisor works for one of the big groups, I can assure you he is Fee-Based, since his bonus in most cases depends on the products he sells.”
We continued the conversation, and he told me that a few years ago, the advisor had suggested transferring the money from his 401(k) to an IRA, where he had sold him three annuities.
The Fine Line Between Advice and Sales
As you might be thinking, we immediately see a case where the advisor could have suggested these annuities, thinking they were truly best for the client (perhaps because the client is very risk-averse), or we could also think he suggested three different annuities because he would receive significant commissions from the sale, which goes against seeking the best interest of the client.
My intention is not to say that a CERTIFIED FINANCIAL PLANNER® who is Fee-Based doesn’t meet the fiduciary standard, but rather to show how the temptation exists to offer something the planner thinks is better, but might not truly be.
That is why when my clients ask us: “Are you a CERTIFIED FINANCIAL PLANNER® who will look for what’s best for me because you are also a Fee-Only advisor?” (meaning a Pure Fiduciary), our answer is Yes. And we would add that we also adapt to your needs with our Hourly Financial Planning service.
Where can you find a Fee-Only, Hourly Financial Advisor who is a Pure Fiduciary?
If you are looking only to validate your strategy or for a specific consultation and you don’t want your portfolio managed, always look for an advisor with these 3 characteristics: Fiduciary, Fee-Only, and who provides hourly services.
There are many portals where you can find them, such as WiserAdvisor, NAPFA, or Wealthramp. Or simply ask Gemini or ChatGPT; they will help you identify the professionals who truly offer what you need.
My commitment is to help you find the transparency you are looking for, whether through another professional who shares these values. But if, after reading this blog, you feel you need to validate your strategy without portfolio management commitments, we’re here to be your co-pilot.
