Service Models, Pricing, and Disclosure
There are three basic models for paying for full-service investment and financial planning guidance - fee-only planning (flat fee/retainer/hourly), asset-based advisory fees, and traditional transaction-based brokerage commissions. Each of these models has advantages and limitations relative to the others, and which model(s) fits best will likely depend upon individual client circumstances and interests. At Financial Planning Hawaii, we believe it is important to clearly disclose how we are paid and to offer all three service models to our clients.
That said, the majority of our clients choose to work with Financial Planning Hawaii on an asset-based fee scale that ranges from .25% - .9% per year, depending upon the size of the portfolio under consideration. Importantly, although included in our portfolio analyses and financial planning reviews, we do not charge fees on assets that are not directly under our investment management (e.g., real estate, bank accounts, assets held in employer retirement plan accounts, etc.). All clients under this service model are provided with access to eMoney, which is the application we use to help clients centralize, organize, monitor, and maintain all aspects of their financial lives. The fees for this service model include ongoing non-discretionary investment management and comprehensive financial planning guidance. The investment management platform is provided through J.W. Cole Advisors, an SEC registered investment advisory firm. National Financial Services (NFS), a Fidelity Investments company, serves as the custodian of the investment advisory accounts.
Disclosure documents pertaining to Financial Planning Hawaii’s asset-based service model are provided below.
- J.W.Cole Advisers Inc., SEC Form ADV Part 2A
- J.W.Cole Advisers, Inc. SEC From ADV Part 2B - John H. Robinson Consumer Brochure
NOTE: FPH does NOT accept discretionary trading authority over any client accounts.
Flat fee planning is becoming increasingly popular as well, and is generally best suited for one-time reviews and second opinions. The cost of such reviews is negotiated in advance, based upon the scope of work.. The typical fee range is $1,500-$5,000. All flat fee planning clients are provided with an eMoney website that is used to gather their financial planning data. Once all client data has been organized in eMoney and reviewed, the analysis culminates in a list of recommendations designed to improve planning efficiency and raise awareness of potential planning mistakes and oversights. While flat fee planning reviews include guidance on both the investment and non-investment aspects of clients' financial plans, the responsibility to execute all recommendations (including investment changes) resides solely with the client. Flat fee planning is provided through Financial Planning Hawaii, Inc., a state of Hawaii Registered Investment Advisor.
Disclosure documents pertaining to Financial Planning Hawaii’s fee-only service model are provided below:
- FPH Fee-Only Financial Planning Client Services Agreement
- Financial Planning Hawaii, Inc.’s SEC Form ADV 2A & 2B - Consumer Brochure
- FPH Registered Investment Advisor Code of Ethics
- FPH Registered Investment Advisor Business Continuity Plan
- FPH Registered Investment Advisor Consumer Privacy Notification
Despite a broad shift toward fee-only planning and asset-based management over the past two decades, FPH believes traditional commission-based brokerage accounts and insurance products still have a place and may represent an optimal choice for certain investor circumstances and interests. Brokerage accounts are available to FPH clients through J.W. Cole Financial, Inc., a FINRA member Broker-Dealer, with National Financial Services, LLC serving as the custodian for all client assets. Through J.W. Cole Financial, FPH offers clients access to a full range of investment products including stocks, bonds, FDIC insured certificates of deposit, mutual funds, annuities and insurance products. With respect to commission-based brokerage accounts, FPH strives to explain as clearly and transparently as possible the fees, commissions, and expenses associated with each transaction and how we are compensated for such trades. Qualitative guidance pertaining to the non-investment aspects of each client’s financial position is considered incidental to the client relationship and is included at no additional charge. Brokerage clients are also given access to eMoney.
For more on Financial Planning Hawaii’s philosophy regarding how investors should pay for financial planning guidance and investment management services, we offer the following two publications:
What's The Best Fit for You? FPH’S introductory guide to helping clients select the financial advisory compensation models that best fit their needs and objectives.
“Who’s the Fairest of Them All? – A Comparative Analysis of Financial Advisor Compensation Models” (John Robinson’s May 2007 Journal of Financial Planning paper.)