In this podcast, we clarify our fees and how we get paid. We believe everyone should be paying for advice through a financial planning process. We explain our process, the two ways we can get paid for financial planning, and how we get compensated for providing investment advice by managing assets.
[3:02] Right now, we are fee-based
[4:19] The two ways we get paid
[5:04] Initial meeting & the proposal are free of charge
[6:52] Our quoted fee is the fee
[8:35] Subscription-based planning
[12:21] Getting paid through investment management
[15:28] Do I have to pay for trading?
[16:47] Acting as a fiduciary
[17:15] Are we compensated by some other party? No.
[19:56] Assets are custodianed through LPL Financial
Tracking # 1-05194678
Thanks for listening!
If you want to be notified when the next episode will be released, you can:
For more insights on everyday financial planning questions, go to www.haasfinancialgroup.com
Contact Us:
Email us at info@haasfinancialgroup.com
Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.
In this podcast, we clarify our fees and how we get paid. We believe everyone should be paying for advice through a financial planning process. We explain our process, the two ways we can get paid for financial planning, and how we get compensated for providing investment advice by managing assets.
[3:02] Right now, we are fee-based
[4:19] The two ways we get paid
[5:04] Initial meeting & the proposal are free of charge
[6:52] Our quoted fee is the fee
[8:35] Subscription-based planning
[12:21] Getting paid through investment management
[15:28] Do I have to pay for trading?
[16:47] Acting as a fiduciary
[17:15] Are we compensated by some other party? No.
[19:56] Assets are custodianed through LPL Financial
Tracking # 1-05194678
Thanks for listening!
If you want to be notified when the next episode will be released, you can:
For more insights on everyday financial planning questions, go to www.haasfinancialgroup.com
Contact Us:
Email us at info@haasfinancialgroup.com
Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Great Valley Advisor Group and Haas Financial Group are separate entities. This is not intended to be used as tax or legal advice. Please consult a tax or legal professional for specific information and advice.
Benjamin Haas 00:02
Hi everyone and welcome to A/B Conversations, where we will help you CFP your way out of it. A podcast where you get into the minds of a couple Certified Financial Planners on how we think and feel about everyday financial planning questions and what should really matter most to you. A healthier financial life starts...now! Hey Adam. How are we feeling today?
Adam Werner 00:30
Feeling great. Even though for those listening in the future, it is another dreary, rainy, miserable day in Pennsylvania.
Benjamin Haas 00:40
Yep. Hi. I'm feeling like a whole new man.
Adam Werner 00:45
Oh, yeah? Please tell.
Benjamin Haas 00:48
Sometimes it's the little things in life, like a really fresh haircut and I feel like a brand new person. Like the attention to detail and the straight razor and my eyebrows. Like, I'm the guy that's been cutting his own hair essentially, since the beginning of the pandemic.
Adam Werner 01:06
Buzz it?
Benjamin Haas 01:07
Yeah, so this, this was pampering, man. I feel like a whole new person.
Adam Werner 01:12
You deserve it.
Benjamin Haas 01:14
Hey, thank you. I really appreciate that. So, what do you want to talk about today?
Adam Werner 01:23
Yeah, so it's an interesting topic. I feel like, I know, we've touched on it in many different aspects in many different podcasts but we talked about putting it all in one spot. And it ultimately comes down to the question that we often get asked, sometimes sooner than later, is, how do you get paid? What's in it for us? Trying to put some thoughts into one consolidated spot here for people that may have that question, we thought would be useful.
Benjamin Haas 01:56
If you think about the importance that we want, the important role that we want to play in somebody's life, really being life partners here, when it comes to everything that's going to be going on in your financial life and even the human side of that really wanting to walk you through some heavy things in life and be there for you. It's really important that there be complete transparency on what's in it for us. We are providing a service here and I think that's no different than anybody going anywhere to purchase any product or service. There is always going to be that question. Well, how do you get paid? So, podcast 51. It's taken now 51 episodes to get there. I know, it's on the website somewhere and we don't want to be intentionally vague and I know we often will say it depends. This is a good opportunity to actually make it a little conversational on why we believe in the transparency in the way that we do and why we charge the fees the way that we do. So I'm going to throw it right back to you. I'm going to let you get on with this thing.
Adam Werner 03:03
So when you said intentionally vague or we don't want to be intentionally vague with kind of our fee structure, the way we get paid. I'm flashing back to a conversation we had earlier this week and I know she's a listener. She had been towards the end of the meeting; she flat out told us or asked the question and with the caveat of: do not be vague. Please be as clear and specific as possible so that I can understand and I love the way that she asked that question. So I'll start by being intentionally vague. Our fee structure or the way that we get compensated, at this point is fee-based. We're not charging commissions; we're not getting paid transactionally. We're not paid to place a product but because of that our fees can be a sliding scale, depending on the complexity of the service needed, account size if we're talking about investment management. We have tiered schedules so to a certain degree, it's hard to just put somebody, here's the grid, find your situation where it falls on the grid and then there's the fee. So that is part of the struggle for us and that it really is somewhat variable to a degree.
Benjamin Haas 04:19
So let's separate out the two ways that we then do get paid based on those scales and I want to start with what's really important to us is the financial planning process. While there is a scale based on complexity, it really comes back to how much time we're going to put into things and that's going to be one of two ways. One, there's going to be some upfront initial planning that we're going to do and that is going to be a fee that is as transparent as can be. We're going to put a proposal together based on everything we know about what you need to have happen and what we know we're going to put into this, the questions that we need to have answered and there's going to be a number that's put right in front of you that's says: here is the cost of engagement with the Haas Financial Group.
Adam Werner 05:04
Yeah, if you would like to move forward, here's the number. A specific, clear number that if you say yes, now we're going to move forward, that's what it costs and we should preface that by saying, up to that point, there's absolutely zero financial commitment on the prospect or the client's end. We don't charge anything for an initial meeting or that initial consultation. We don't charge anything to even generate that proposal to get to that point, it truly is zero commitment financially, from somebody to get to that point where we actually do put a solid dollar in front of them with a decision. Yeah, and we can be a little more transparent now, too. We know that it's not an insignificant investment for somebody to make in hiring us as consultants. You know, $2000, $3000, $4000, $20,000, it's not insignificant to engage in that way. It's just really important for people to give us the opportunity to really assess what is that number for you and again, that's going to come back down to some very individualized inputs. There's a lot of meetings on the front end, there's a lot of data collection on the front end, there's a lot of data management on the front end for us, just to get to the point where we go, now we're ready to really start having deep conversations with you on what we think you should be doing. So we want to get paid as consultants to provide advice and that advice will be tailored to you. In a way, that fee is a little more tailored to you too. We have to come up with a time, the amount of time we think to put into it but that will be one number. The plan will have one number and whether it takes a couple more conversations or a couple less conversations, we are not coming back to you. They'll never be a surprise bill. Yeah, and I'll say this. I'll ask for your confirmation but I I'd venture to guess at this point, we end up spending more time than less when it comes to going through that planning process for the fee that we throw out there. We usually “under promise and over deliver” when it comes to time and meetings and conversations and documenting that advice where we're not shooting for the moon in terms of here's the fee and that'll encompass everything. I think we try to be as fair as humanly possible knowing that we're not going to log hours like an accountant or like an attorney, if that's the model that they choose. That we try to get as close as we possibly can, again, knowing that we end up spending more time than that more often than not, but we just want to be as fair and transparent as possible on that front end.
Benjamin Haas 07:52
Let me piggyback on that and then wherever you want to take the conversation, I'll follow you. Part of the reason for that is philosophically, we want to be in the know. We want to know what's going on in your life. We want to answer questions. So we can't have you afraid to pick up the phone or afraid to schedule a meeting because you think there'll be some sort of expense or added fee or surprise bill that comes behind that. We put the onus on ourselves to go to complete this project. Think of the addition on your house, we're going to give you, this is what it's going to cost for us to draw up these plans and if something has to pivot in there, so be it.
Adam Werner 08:35
Yeah, yes, put very well said. So then the other component or the other way of approaching the financial planning side of things. We talked about now this is like a front or a flat upfront fee, compensating for time, the other way that we can get paid through that process now is a more subscription-based approach where it's not necessarily the big chunk upfront that it is a monthly quarterly, whatever that breakdown needs to be, whatever is comfortable but essentially we can spread out that fee for a more ongoing-based service.
Benjamin Haas 09:12
So this shows up in two different ways. One, we see this fitting a maybe a younger clientele. People that are starting out in a financial life, accumulating assets where I'll go back to what I just said two minutes ago. Where the inputs for us on the front end are not as heavy, they're not as cumbersome. They're maybe not as complex so the amount of investment that we're making in developing that plan is not as much. It's more hand-holding and conversational. It's meeting based where we're really working through those things together. We're getting paid overtime, not overtime, getting paid over time, feels a little more appropriate. Or the other side of that is once we've done initial planning, there's a lot that goes into making sure that those conversations can still be appropriate that we are reviewing things that may need to be changed where there's little changes going on in somebody's life. They're paying more for the ongoing relationship and meetings and service and accountability and follow up but that doesn't come in one big chunk then like an initial plan might.
Adam Werner 10:20
They are slight variations of each other, right? The ongoing for in the way that you frame that. For younger clients that we have that are accumulating assets. Maybe they're starting a family, whatever, just essentially building the foundational building blocks of their financial life, there's a lot more moving pieces or there's a lot more variables that can change very quickly. So just being able to have access to us, like you said, for those ongoing conversations feels much more in tune with a pay as you go approach than it is, yeah, we're going to pay this flat fee upfront and we're not really sure what's coming down the pike. To your point, as we see people get closer to retirement, when there is a potentially big, irrevocable decision that you want to make sure you get right. That's where it's more of that project based. Let's focus on this big decision and all the little ones that go around it but then that's usually where we would see you know, that one-time flat planning fee situation.
Benjamin Haas 11:25
Yeah, and I think it's hopefully fitting the budgets also of somebody depending on a phase of life. When we're talking subscription-based planning, you're paying $185 a month. We're talking not a car payment here. It's a relationship that I think allows you to really feel like you have partners in the process that you can ask those questions that we can check in on things. That you're plugged into our technology so you have our data aggregation but to your point, we're really working on things that are much longer time horizons. There's a much bigger runway we’re just steering the ship a little bit is not the same as those big one-time irrevocable decisions around pensions and social security and retirement. So yeah, well said.
Adam Werner 12:14
Anything else you want to touch on the financial planning side?
Benjamin Haas 12:20
Nope, I don't think.
Adam Werner 12:21
So then let's shift gears to the other way that we get paid when it comes to investments: investment management. We clearly live in the world and I guess I say clearly because if you've listened to these podcasts, I think we've been pretty passionate about being paid for advice. Paid for time and in that world, that is fee-based compensation as opposed to something that is more commission-based or on transaction costs for products. Not so much a service but more the end investment product, annuity, whatever that may look like. We live in the fee-based world where we again, it ultimately comes down to being compensated for our time and expertise in helping manage the investment side of someone's financial life.
Benjamin Haas 13:15
Yeah, and that would fall way more in line with a subscription-based idea than it is some sort of initial output. If we're being compensated through the assets, it's a flat percentage that is paid quarterly over time. So there's really not even a contract that says, hey, you're now obligated to stick with us. Our whole point is we are here providing an ongoing service and if we do a good enough job, you'll continue to pay. If we're not, then you may seek those services elsewhere. So it really is a service-based model quarterly. In the world of transparency, that can start at 1.15% annualized. That can start as low as half a percent. The point is, it's based on the amount of assets that we are responsible for, where you were literally tiering down, depending on what those accounts or those householding amounts are.
Adam Werner 14:10
Yeah, I'm glad you said that because that was exactly what jumped into my head because again, similar conversation we had earlier this week of we say, we get paid as a percentage of the account that we're managing and the question was, but what is it? What's the percentage? Is it 10%? Is it 5%?
Benjamin Haas 14:24
Geez.
Adam Werner 14:25
It starts at, yeah, I know. But that's, again, we live in this world day to day, we know what we charge it is kind of the Wild West out there in terms of how advisors or for other financial professionals get paid. So yes, to put a number to that as a starting point. Yeah, it's roughly that 1%, 1.15% is like the peak at where we start.
Benjamin Haas 14:49
Yep, and that can certainly change too I think depending on the security makeup. If there are situations where we know we're going to be far more passive. Again, I'm thinking of a younger clientele that may have a longer runway. We may use instruments that we're not planning on being overly active with. If we're not overly active and services aren't there, this just goes back to that theme. We want to be paid for time, then that may be a start, we may start at a smaller percentage. If there is a lot more sensitivity, then that may be where that 1.15 starts or that 1% starts.
Adam Werner 15:26
Yeah, that's fair.
Benjamin Haas 15:28
What I think would be important to put on top of that is an all-encompassing fee. We think it's really important, again, for people to understand transparency here. It's our job to absorb whatever those trading costs are. If we need to be making changes and think about why we would be making those changes, we're compensated. It's the Fisher Investments: we do better when our clients do better. If your account value is going up, percentage of that account value coming to us as compensation is going to be higher. If your account is losing value, then we're losing value too. So if we're recommending changes, either as part of a regular rebalance, or, hey, it's our due diligence. This fund isn't doing its job anymore, this asset class does not seem as attractive. We're not getting into the weeds here of light dimmers, not light switches but if we're going to make these three changes, we want it to be crystal clear to our clients that you're not paying for those changes. We're absorbing those expenses because we believe it's what's best either to help the account or to preserve it.
Adam Werner 16:32
Yeah, and that's where we like to say we're hoping as much as humanly possible though maybe not literally but figuratively sit on the same side of the table as they are so that we at least are incentivized correctly.
Benjamin Haas 16:47
Yes.
Adam Werner 16:47
To treat them and the way we do. It's an ongoing relationship. It is in our best interest and their best interest for us to at least be aligned in that sense. That yes, if we think there is opportunity, then we're going to hope to try to grow this account. If we think things are going the other direction and we need to protect it, then we're going to make those moves because ultimately, it's our job as a fiduciary to put their best interests,
Benjamin Haas 17:14
Hey, buzzwords.
Adam Werner 17:15
Boom, nailed it. So, that's an important piece of our philosophy, right, and just the way that we choose to get paid and that's not the only way that people can get paid for investment management. So we'll say that the fiduciary world, where we are required. Whoever is a fiduciary is required to act in their client's best interest and the other side of that being the suitability standard, which is crazy to think that that still exists at this point, that a financial professional only needs to invest or find a product or some sort of solution that is simply suitable for that type of client. It doesn't necessarily have to be the best one for them in that situation. It can merely be suitable.
Benjamin Haas 18:02
Yeah. I don't
Adam Werner 18:05
Do you need a soapbox?
Benjamin Haas 18:08
Yeah, that world is dying a slow and steady death but what I think I will add to that because it is a fair question. Part of the reason that we want to be in the advice-based world where we're paid to give advice is also to acknowledge that our independence means - we don't really care about the investment selection, per fund family or per investment provider. That really isn't the point anymore. The point is to put the best portfolio we can together based on the needs within the financial plan, risk, return, liquidity, all of those fun things. So that when people ask, well, do you really like this fund family or this? It really doesn't matter to us and we're not compensated by those companies and that's the point. There really is and should be no bias in our end, one selection versus the other. It really should be what's best for you based on our assessment within the plan. So hopefully that covers that question or misconception that comes too. Are we compensated by some other third party? We're not.
Adam Werner 19:15
Yes, well said. What else you got.
Benjamin Haas 19:21
I think we might be good here on that.
Adam Werner 19:23
Sweet, I agree. I got nothing else on my list.
Benjamin Haas 19:27
So maybe that's let's tag team here and summarize that. We think everybody should be paying for advice at this point. It's either through some sort of financial planning process, where at least in our world that is a flat fee that we’ll define together on the front end or a subscription that we'll define together on the front end. Or we're going to get compensated and/or we'll get compensated for providing investment advice by managing those assets. I guess that's an important clarification.
Adam Werner 19:55
Ooh, yeah.
Benjamin Haas 19:56
We are custodianing those assets through LPL. Financial This is not us giving you advice on a 401k. That's custodianed somewhere else.
Adam Werner 20:06
Yes, I'm glad you said that because that is very important clarification. So through the financial planning process, we absolutely give, you know, investment allocation advice to accounts that are not under our direct control. But yeah, when it comes to getting paid through the investments, that is only on accounts that for us right now, it's custodianed through LPL Financial. We're going to open accounts. We are directly responsible for those lists of accounts.
Benjamin Haas 20:35
We have discretionary authority to be your financial professional on those accounts. We buy and sell by clicking our buttons not going into some sort of other portal.
Adam Werner 20:49
Yes, yes, correct.
Benjamin Haas 20:51
So point of clarification, good. How we get paid not through commissions, not through buying and selling, none of that stuff. So hopefully that makes it way more transparent than what may be verbiage on the website. But certainly as people have questions, the point is to come to a conclusion on what do we need to get paid to engage with you in a way that works for all of us?
Adam Werner 21:14
Yes, agreed.
Benjamin Haas 21:17
Alright.
Adam Werner 21:18
Alright. Thank you.
Benjamin Haas 21:20
What about you? Any haircuts around the corner, you're going to like feel as good as I am right now?
Adam Werner 21:24
It's a clean little cut.
Benjamin Haas 21:27
Is that like every four weeks? Now I know I'm going to want to, I'm going to want to do this like every other week.
Adam Werner 21:34
Every four weeks until I lose too much and then it's just going to...buzz. Trim it short.
Benjamin Haas 21:42
You know my strategy at this point. I'm leaning right into it. Who needs hair? Alright, my friend. Have a wonderful rest of the day. Thanks for your help on how we get compensated. Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we've always been the show are for general information only and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you. Consult with your attorney, your accountant and financial advisor or tax advisor prior to making any decisions or investing. Thanks for listening!