Service and Pricing: Unpacking Our Value

Service and Pricing: Unpacking Our Value

Service and Pricing: Unpacking Our Value

Ever paid a fee … where you didn’t know what the fee was until you got the bill? It can make for uncomfortable and strained interactions. You might not be able to relax. You could be distracted and miss important details. Maybe you’re busy watching the clock so you don’t go a minute over your scheduled time. 

Then the bill comes and … ouch. You’re paying more than you thought or didn’t receive the value you expected for the cost. I’ve seen this happen with lawyers, doctors … and financial advisors.

Doing What We Do for You

In moving to a single service and pricing model, Financial Planning Fort Collins is making our value perfectly clear. Over the past four years, I have witnessed firsthand the phenomenal success our Comprehensive Services clients are having with our approach in developing and implementing their financial plans. As a firm, we’ve decided to get even better at delivering the Comprehensive Services experience, and that starts with uniformity in what we do and how we do it.

I sincerely believe that we have one of the best service models in financial planning. We don’t hand you a static binder and say, “Here you are! Now go implement your financial plan.” Instead, we create actionable advice and recommendations, directly implement big components end-to-end (think investments, taxes, and even estate planning), and provide high-touch support to assist with the parts that we can’t implement directly.

Our model is phenomenal for accumulators and retirees alike. We recognize that these phases involve different needs, and we’ve adapted our processes to meet them both. I am so excited about the direction Financial Planning Fort Collins is heading!

I also have a special fondness for our legacy clients. Some of you worked with me as a fresh-faced college graduate almost two decades ago. You’ve made transition after transition with me as I built this business and brought on an incredible team of partners. I know that Dan would say the same about his clients who found a home with Financial Planning Fort Collins almost three years ago.

I recognize that where we’re going will not work for everyone. This is bittersweet. I think we can improve everyone’s financial plan, but I have to be realistic about how we take on the workload and work-life balance of Comprehensive Services for each and every one of our clients’ demands.

The Pricing Piece

One of the core tenets of Comprehensive Services is simple, fair, and transparent pricing. You can find our pricing spelled out in plain English right on our website. As we make this transition, I felt it necessary to breach one of the great taboos of financial services: Talking about price.

Talking about price in the financial services industry is taboo because it’s perceived to be bad for business. Unless you’re going for an undercut everyone and give it away for “free”* model, openly sharing and discussing pricing will only lead to the wrong conclusions … or so the thinking seemingly goes.

*P.S. Nothing is free.

Allow me to walk you through the various pricing models in financial services, share my thinking about each one, and explain how our Comprehensive Services pricing works. It’ll be awkward, sure, but it will also be eye-opening and I can rest easier knowing that we’re living up to that simple, fair, and transparent ideal.

Commissions (We Don’t Charge Them)

This is the granddaddy of all financial services industry compensation. Before the advent of the title Financial Planner (and until this day), various brokers, agents, and advisors sold financial products to their clients for commissions. And that’s how they got paid.

There’s nothing inherently wrong with this. However, the cracks in a commission-only compensation model start to open up with potential and actual conflicts of interest. Just like the butcher thinks you need to eat more meat, commissioned financial advisors will want you to buy what they’re selling. If you need it, great! If you don’t, not great!

For what I think are obvious reasons, commission compensation is incompatible with Comprehensive Services and Financial Planning Fort Collins, in general. We’re proud of our intentionality in avoiding and mitigating conflicts of interest. Commissions are a bridge too far for us to build.

Flat Fee (We Thought About This, but It Doesn’t Scale)

At the other end of the spectrum, there is the flat fee. If commissions are yin, then flat fees are yang. Several fee-only financial advisors and Financial Planners charge a flat fee. The fee doesn’t change for any particular circumstance or situation. I think this is noble in many ways but also problematic in others.

When Comprehensive Services was first introduced, I toyed with the idea of implementing a completely flat fee. The issue I discovered was that it would become difficult to shoehorn client cases with more complexity — both initially and on an ongoing basis — into one unchangeable fee. I recognized that, if we were going to provide a service model that scaled with our clients’ needs, a completely flat fee wouldn’t work in the long run. 

Variable Fees (We’re Here … but With a Better Approach)

This is a wide-ranging pricing model. It’s easily the most heavily used, with everything from hourly fees and fees as a percentage of assets under management to flat-dollar fees that are adjusted for complexity. A variable fee solves the problems that the flat fee runs into. If the needs of the client are more complex, challenging, or simply take more time for the financial advisor or Financial Planner, the variability in the fee can account for the differences.

Comprehensive Services was initially priced as a flat-dollar — but variable — fee, based on complexity. Frankly, communicating the fee on a more complex case was very challenging. Unfortunately, this is because there are very few financial planning firms that provide the transparency necessary to measure what’s reasonable and what’s not when it comes to a dollar-stated fee. So, no matter how many hours go into and how much value comes out of a Comprehensive Services relationship, it never sounded right to a prospective client. Live and learn.

Fee-based (i.e., Fee and Commission — the Opposite of Low-Conflict and Unbiased)

I wanted to take some words to describe one pricing model that I think is not only the most popular but also the most abused: fee-based pricing. Always listen carefully for that last part. Based. The “fee” part means that the client pays a fee for advice. The “based” part means that the advisor also earns a commission if the client implements the advice.

Remember the butcher? Imagine if you paid them to advise you to eat more meat and then paid them again when you bought the meat from them. It’s an awfully convenient way to create problems for solutions, isn’t it? 

Think of a financial services company. Every jingle, every commercial. The mutual company whose direction is up and to the left. The other one with a friendly first and last name and lots of retail storefronts. All of the big Wall Street companies. You name it … they all use a fee-based pricing model. 

For the first 13 years of my career, I worked under this model. Once I saw the proverbial light, I couldn’t get away fast enough. It’s perverse, in my opinion.

How We Price Comprehensive Services and Why

If you’ve read this far (I’m sure you’re ready for the point), thank you. You’re taking the time to understand this, and I appreciate it. The backstory on our pricing for Comprehensive Services is about learning what works and what doesn’t — but also how we can deliver a premium service for a reasonable price.

It starts with one simple idea: The financial services industry at large is so good at the art and science of hiding fees and commissions that hardly anyone actually knows how much financial services cost. When you hear that someone charges 1.5% of assets under management, that doesn’t sound anything like $15,000 for every $1,000,000 of assets under management. And yet they are exactly the same thing.

The second time I ever proposed a flat fee to a prospective client to deliver Comprehensive Services — which included the management of a $2,000,000 investment portfolio and a multi-state income tax situation — I learned this lesson the hard way.

Even though that prospective client was paying over $25,000 for similar services (across two different service providers), my quote was “too expensive.” All of the value that we’d bring through consolidation of both strategy and service was not enough to clear the hurdle of a dollar-stated, rather than a percentage, fee.

So maybe we didn’t learn the whole lesson, but we definitely iterated on it. Today, to keep things simple, we still price Comprehensive Services for a single flat fee. It’s a means of differentiating the financial planning component (what we’re actually charging a fee for) from the included investment management (up to $1,000,000) and tax preparation.

The big difference between now and then is that we introduced a way to scale based on additional assets under management. If you want us to manage your investment portfolio over $1,000,000, we’ll do that for a very reasonable fee. Our value is directly aligned with our entire financial planning process. But the realities of operating a business responsible for stewarding life savings make adding this fee for the management of additional investments necessary.

In situations where there is extraordinary complexity — and typically where we will also bring extraordinary value — we can and will make an adjustment to our minimum fee to account for that complexity. To be fair, we still include investment management for whatever amount calculates out to that adjusted fee. Again, this is because investment management is not the most valuable thing we do. Financial planning is the most valuable part. As such, we charge for the financial planning, and we include investment management and tax prep.

There you have it. It’s so transparent I feel almost naked. I hope you’ve appreciated this insight. We’re doing something really cool at Financial Planning Fort Collins. Thank you for being a part of our journey and for allowing us to be a part of yours.

Ready to schedule your next meeting?

Simply head to the Meeting page where you can find and schedule a convenient time to discuss whatever is on your mind.

Jason Speciner
jason@fpfoco.com

Jason Speciner is a CERTIFIED FINANCIAL PLANNER™ professional, an Enrolled Agent, and the founder of Financial Planning Fort Collins, a 100% employee-owned and fee-only firm. He is also a member of the National Association of Personal Financial Advisors (NAPFA) and XY Planning Network (XYPN). Since 2004, he has served clients of all ages and backgrounds with unique experience working with members of generations X and Y. To learn more, check out Jason's blogs and see the media he's been featured in.



MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds.
ANNUAL FEE
1.00% of assets under management ($100 per $10,000 managed). Debited from your account(s).
FINANCIAL PLANNING
Strategy:FOCO financial planning services are ongoing, and include unlimited phone, email, web and in-person meeting and consultation time. Pricing is based on the unique circumstances of each client situation. Generally, there is a one-time plan development fee ranging from $500 - $2,000 and a monthly fee of $150 - $500; cancel anytime. Clients utilizing investment management services with portfolios of $500,000 or more will typically receive financial planning services for no additional fee.
INVESTMENT MANAGEMENT
Assets Under Management (AUM) Annual fee as a % of AUM or flat-dollar
$0 - $249,999 (See Invest:FOCO)
$250,000 - $499,999 0.90%
$500,000 - $999,999 0.80%
$1,000,000 - $1,999,999 0.65%
$2,000,000 - $2,999,999 0.50%
$3,000,000 - $3,999,999 $15,000
$4,000,000 - $4,999,999 $20,000
$5,000,000 or more $25,000 + $2,000 per additional $1mm
MINIMUM ACCOUNT SIZE
There is a minimum initial investment of $100,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities.

Minimums do not apply to inStream proactive financial planning as a stand-alone service.
ANNUAL FEE
Assets Under Management Fee as a % of AUM
$100,000 - $249,999 1.00%
$250,000 - $499,999 0.90%
$500,000 - $999,999 0.80%
$1,000,000 - $1,999,999 0.65%
$2,000,000 or more 0.50%

inStream proactive financial planning as a stand-alone service: $1,000/year or $100/month
MINIMUM ACCOUNT SIZE
There is a minimum initial investment of $100,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities.

Minimums do not apply to inStream proactive financial planning as a stand-alone service.
ANNUAL FEE
Assets Under Management Fee as a % of AUM
$100,000 - $249,999 1.00%
$250,000 - $499,999 0.90%
$500,000 - $999,999 0.80%
$1,000,000 - $1,999,999 0.65%
$2,000,000 or more 0.50%

inStream proactive financial planning as a stand-alone service: $1,000/year or $100/month
MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds. Invest:FOCO is currently available for Individual, Joint, Traditional IRA, and Roth IRA registrations.
ANNUAL FEE
0.65% of assets under management ($65 per $10,000 managed)
MINIMUM ACCOUNT SIZE
The minimum initial investment for the Invest:FOCO platform is only $5,000 per account. This minimum can be met via transfer of an existing account or with new funds.
ANNUAL FEE
0.65% of assets under management ($65 per $10,000 managed)
TAX PREPARATION
Invest:FOCO clients are eligible for a 10% discount on income tax preparation services offered through Fort Collins Tax Service, LLC. This discount applies to the base cost for return preparation as well as Schedules B & D. More details can be found here.
MINIMUM RELATIONSHIP SIZE
There are no minimums when utilizing inStream proactive financial planning as a stand-alone service.

When investment management services are desired, there is a minimum initial investment of $125,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. A client household may generally include accounts for a head of household, a significant other, dependents, and any controlled organizations or entities. inStream proactive financial planning is then included at no additional cost.
ANNUAL FEE
inStream proactive financial planning as a stand-alone service: $1,250/year or $125/month

Assets Under Management Fee as a % of AUM
$125,000 - $249,999 1.00%
$250,000 - $499,999 0.90%
$500,000 - $999,999 0.80%
$1,000,000 - $1,999,999 0.65%
$2,000,000 or more 0.50%
TAX PREPARATION
Strategy:FOCO clients are eligible for a 50% or 100% discount on income tax preparation services offered through Fort Collins Tax Service, LLC. This discount applies to the base cost for return preparation as well as Schedules B & D. More details can be found here.
Monthly Economic Update
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Monthly Economic Update
Stay in the loop with our Monthly Economic Update. It's a great way to catch up on the things effecting your financial plan in an easy to read and relatable format.

We promise to only use your name and email address for sending our Monthly Economic Update. We will not sell, rent, lease, loan, or use your name or email address for any other purpose, internally or externally. You can easily unsubscribe at any time.
MINIMUM ACCOUNT SIZE
Minimums do not apply to always-on, real-time financial planning as a stand-alone service.

For investment management services there is a minimum initial investment of $125,000 per Strategy:FOCO client household. This minimum can be met via transfer of existing accounts or with new funds. Investment management fees are generally debited from the accounts to which they apply. Financial planning services are included for Strategy:FOCO investment management clients at no additional charge.
ANNUAL FEE
Always-on, real-time financial planning as a stand-alone service:  $125/month or $1,250/year

Assets Under Management Fee as a % of AUM
$125,000 - $249,999 1.00%
$250,000 - $499,999 0.90%
$500,000 - $999,999 0.80%
$1,000,000 - $1,999,999 0.65%
$2,000,000 or more 0.50%
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FINANCIAL PLANNING
Financial planning services are ongoing, and include unlimited phone, email, web and in-person meeting and consultation time. Pricing is based on the unique circumstances of each client situation. Generally, there is a one-time plan development fee ranging from $500 - $2,000 and a monthly fee of $150 - $500; cancel anytime. Clients utilizing investment management services with portfolios of $500,000 or more will typically receive financial planning services for no additional fee.
INVESTMENT MANAGEMENT
Assets Under Management (AUM) Annual fee as % of AUM or flat-dollar
$0 - $249,999 1.00%
$250,000 - $499,999 0.90%
$500,000 - $999,999 0.80%
$1,000,000 - $1,999,999 0.65%
$2,000,000 - $2,999,999 0.50%
$3,000,000 - $3,999,999 $15,000
$4,000,000 - $4,999,999 $20,000
$5,000,000 or more $25,000 + $2,000 per additional $1mm
ESTIMATE YOUR FEE
Your fee is determined by the complexity of your needs and situation. The primary proxy we use for complexity is your investable net worth, which is generally your total net worth, excluding your primary residence. Your investable net worth includes the value of cash, bonds, stocks, mutual funds, rental real estate, and other business or financial interests. This aligns with the holistic nature of our comprehensive services. You can use the chart below to estimate your fee based on your investable net worth. In some circumstances, your fee may be more than the minimums in the chart below.
Annual Fee Investable Net Worth (INW)
$4,000 (minimum for an individual) Up to $500,000
$6,000 (minimum for couples) Up to $1,000,000
$8,000 Up to $1,500,000
$10,000 Up to $2,000,000
$11,000 Up to $2,500,000
$12,000 Up to $3,000,000
+ $1,000 per additional $1,000,000 of INW
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ESTIMATE YOUR FEE
Your fee is determined by the complexity of your needs and situation. The primary proxy we use for complexity is your net worth, which is the value of what you own — including cash, bonds, stocks, mutual funds, real estate, and other business or financial interests — minus what you owe. Our transparent, flat-dollar pricing aligns with the holistic nature and value of our comprehensive services. You can use the chart below to estimate your fee based on your net worth. In some circumstances, your fee may be more than the minimums in the chart below.
Annualized Flat Fee Net Worth (NW)
$6,000 (our minimum fee) Up to $1,000,000
$8,000 Up to $1,500,000
$10,000 Up to $2,000,000
$12,000 Up to $3,000,000
+ $1,000 per additional $1,000,000 of NW
FEE SCHEDULE
Unless there is truly unique or extraordinary complexity associated with a client’s situation and financial circumstances, our fee will be based on the market value of the assets under management (AUM) for investment management services, subject to a minimum fee. The fee is blended and calculated using the following schedule. We do not require a minimum investment of any amount.
Assets Under Management Annual Fee
$0 - $1,000,000 $6,000
$1,000,000 - $3,000,000 0.50%
$3,000,000 - $5,000,000 0.25%
$5,000,000 and above 0.10%