It should come as no surprise that when looking to engage a financial planning firm, you are buying a service. Buying a relationship, however, may be the wiser choice for you.
In this post we will attempt to explain the difference between a service and a relationship, and why the latter may be the best way to go for you. What you buy, of course, is largely up to you. In our experience, most prospective clients don’t know what they are looking for when they embark on interviewing financial planning firms.
The first sign that you may be unclear on what you want, is you choose to interview 4-5 firms with the hope that “you’ll know it when you see it.” A drawback to this approach is that fatigue often settles in, and you choose the last firm you interviewed.
Another sign of indecision is price sensitivity. Pricing is tangible, quality of advice and judgment are more difficult qualities to discern. Don’t get me wrong, pricing and value are important. However, when seeking medical care, few of us look for the lowest cost provider. Rather, we look for experience, empathy, and smarts.
So what is the difference between a service and relationship? In short, a service is transactional, whereas a relationship is ongoing. Some examples of a service may be:
- Planning advice by the hour – You want to handle your finances, but question whether you are on the right track.
- Emergency advice – Retiring in the immediate future? What do I do with this 401(k) distribution?
- You want an investment partner – You are a do it yourselfer who wants to have someone else handle your portfolio, but find it tough to cede control to an advisor.
A consumer seeking a financial planning relationship realizes that their need for financial advice will be ongoing. They appreciate proactive advice that can help keep small concerns from becoming big problems in the future. They understand that it’s not what you make, but what you keep that is important. Effective tax planning requires tight coordination between portfolio management, knowledge of employer based retirement planning options, and estate planning considerations.
Consumers looking for a financial planning relationship put a high price on the value of their time. They tend to be busy, successful people who certainly have the brains to handle their finances, yet choose to offload that responsibility to a planning firm so they can spend their time pursuing activities and relationships that are most important to them.
The true value of a financial planning relationship is often measured in years, and hopefully decades. That is why it is so important for you to be philosophically in alignment with your planning firm. You also need to determine whether they have the technology to allow you to get what you need from the firm, when you need it. In the end, this decision is not just about your money; it’s about your time, and how you can live the best life possible with the money you have.
Connect with us if you would like to further discuss creating and maintaining a relationship.
PLEASE SEE IMPORTANT DISCLOSURE INFORMATION HERE.