How much does Financial Planning cost?
Anyone with a decent income or moderate amount of wealth can benefit a lot from financial planning. It is the process of setting up financial objectives, assessing resources and assets, getting prepared for future finances and creating plans to achieve several monetary goals. Financial planning involves many scopes such as risk management, asset allocation, taxation, retirement and estate plans. A financial planner will help you develop a detailed and comprehensive plan for the entire household. You may have asked yourself, how much does financial planning cost? And why do I need to hire a financial planner?
Hiring a financial planner can help you do away with financial mistakes that can potentially harm your wealth. Careful and meticulous planning of finances can help individuals and couples set their priorities and work towards long term goals. A professional finance planner possesses a broad knowledge about investments, current mortgage rates, estate laws and tax planning. Your planner works hand in hand with your accountant, investment professional, Realtor, loan officer, insurance agent and estate lawyer to coordinate your financial plans. Financial planning can be done for several reasons. Many people need it to provide retirement security, a child’s college educational fund and etc. So how much does financial planning cost?
Certified financial planners general charge in three different ways namely a fixed/hourly fee for a specified service, on a commission basis and a combination of the fee and commissions from the products bought. Most financial planners do provide a 30 minute to an hour long preliminary interview at no cost.
Hourly fees
Hourly rates would usually average between $80 to $400 depending on your geographic location and how complex your financial planning is. Flat fees for retirement plans would run around $100 to $650 including free online services. If you would want a comprehensive planning on all areas, expect to pay around $250 to $3,000.
Commission Based Planners/ Stockbrokers
A financial planner’s commission typically is one percent or less on treasury bills and money market accounts. It can also reach up to 4.75 percent for mutual funds or a percentage of the initial year’s premium on insurance products. There is also an additional cost per year that can run anywhere from 0.20% to 2% and other administrative fees for a certain account.
Assets under Management Fees
This is one of the most common compensation structures that advisors are currently in. You get to pay for a quarterly or annual fee equal to a certain percentage of your portfolio.
Fee for Service
There are some financial advisors who opt to go for a one time for a given service. This is somewhat like the hourly structure but you get to know exactly the things that you will be paying for and the work that you expect to be done. Fees may vary from one professional to other but it is because of the fact that the services provided also vary as much.
Take some time to think about the services that you need before even shopping around for a financial planner to work with.
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