Fee-Only Planners: the Good, the Bad, the Ugly

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I am so frustrated with the world of Fee-Only planners (ones that can’t make a commission from the sale of a product (fixed or variable)) that I just rolled out a new consumer education website where I go into detail as to the Good, the Bad, and the Ugly when it comes to Fee-Only planners.

The website can be found at: https://feeonlyadvisors.net or by clicking the image below.

I’ll be interested in the feedback from the new site. I imagine that Fee-Only planners won’t care for it too much (although I hope it motivates them to learn about products they currently shun). I imagine that Fee-Based advisors will like it. I know insurance agents will like it.

Why did I create the website?

The same reason I always create consumer education websites, to help consumers make better decisions when it comes to their money. There is no more important decision then picking the type of financial planner you want to work with, and because the public has no idea of the built-in biases of Fee-Only advisors, I knew I needed to create the site.

Is that really what motivated me to create the website?

The trigger that motivated me to spend the time to create this website was two-fold.

1) I talked with an advisor about a month ago who said he was thinking of getting rid of his insurance license to become a Fee-Only planner. I asked why in the world would he do that, and he said the magic words I’ve heard far too many times. He said, because its good marketing and it would help him pick up clients. After spending 30 minutes on the phone telling him why I thought it was a mistake to become a Fee-Only advisor, I think he saw the light and will NOT go down that road.

2) I talked with a Fee-Only advisor a few weeks ago who blew me away. She was so smart and rational that I couldn’t believe I was talking to a Fee-Only advisor. After spending 30 minutes on the phone with her I ended the call by saying that in the nearly 20 years of doing what I do and after interacting with hundreds of Fee-Only advisors, she was the ONLY Fee-Only advisor who “gets it.”

What was so special about the Fee-Only advisor I recently talked with?

1) She not only knew about Fixed Indexed Annuities (FIAs), but she recommends them.

2) She not only knew of Indexed Universal Life (IUL), but she recommends them.

3) She didn’t know of Single Premium Life (SPL) policies designed for long-term care coverage, but she was very interested to learn more about them.

Why are the above three bullet points so amazing?

All three products listed above pay commissions.

Because Fee-Only advisors subscribe to the CULT of no commissions, EVERY Fee-Only advisor I’ve talked with had none or almost NO working knowledge of the benefits of FIAs, IULs, or SPL, and they sure as heck don’t recommend the products to clients.

So, what’s in the new website?

The “Good“-I state essentially the talking points from the Fee-Only association.

The “Bad“-I discuss why it’s impossible for any financial planner to give the best and most suitable advice if they are NOT familiar with and use FIAs, IULs, and other commission based products when appropriate.

The “Ugly“-I explain the lack of disclosure of Fee-Only advisors when it comes to their built-in biases against commission based products.

What should you do with the website?

I hope Fee-Only readers will go through the site and do so with an open mind. If they do and if they are truly interested in putting the client first and fulfilling their fiduciary duty, they will then choose to take the time to learn about FIAs, IULs, and other commission based products that can have a place in many, if not most, of their client’s financial plans.

Ultimately it would be great if some Fee-Only planners saw the light and converted away from the CULT of Fee-Only to become Fee-Based advisors.

I imagine Fee-Based and insurance-only licensed advisors will think about the use of the website if they ever have to compete against a Fee-Only advisor.

Love this site or hate it, but consumers need it and it was born out of my nearly 20 years of experience in the industry and my past and constant interaction with hundreds of Fee-Only advisors.

Roccy DeFrancesco, JD