By Matt Knoll, CFP®, Sr. Financial Planner
Early in my career, I remember hearing the story about how The Planning Center got started. The company’s founder, Marty Kurtz, had enjoyed a successful career in the insurance industry where he realized he loved helping clients plan for the future. What he didn’t like was having to sell insurance products. He preferred to help clients by giving them objective advice so they could make better decisions as they navigated life’s many transitions. And that’s why he started The Planning Center.
Marty’s vision always resonated with me. It’s the reason why I chose to come and work at The Planning Center 10 years ago. It also explains why The Planning Center is a fee-only fiduciary firm.
Marty’s values for transparency are central to how we work with all of our clients. As a fee-only fiduciary, I am legally and ethically bound to put my client’s interests first. That may sound obvious – of course an advisor should put their client’s interests first – but some firms have compensation structures that create potential conflicts of interest.
Some firms don’t charge fees at all and instead earn income through commissions. Under this model, when an advisor sells a product to a client, they receive compensation from the underlying company, with various products offering different levels of compensation to the seller. The advisor can also be compensated for each transaction they make, such as buying or selling stocks or mutual funds. A potential conflict of interest occurs if an advisor is motivated to earn a commission by promoting an investment product that is not in the client’s best interest. Similarly, an advisor may be tempted to rebalance a client’s accounts for the sole purpose of generating transaction fees.
This model gives advisors the option to receive commissions for the sale of insurance products, mutual funds, etc. as well as the ability to charge a separate fee for financial planning work or ongoing money management. A fee-based model reduces potential conflicts of interest found in a full commission structure but doesn’t eliminate them. Services are more likely to be offered ala carte which can also result in clients getting nickel-and-dimed for items.
As a fee-only fiduciary, TPC falls under the independent Investment Advisor (IA) regulatory structure and is regulated on a Federal level by the SEC. We are bound by a bona fide fiduciary standard in our work with clients, the most stringent standard applied to advisors or planners available.
TPC has chosen to employ a retainer model in calculating our fees. Services are all-inclusive, so there are no additional charges for planning. The retainer model allows us to minimize potential conflicts of interest and makes it easier to develop strong relationships with clients, unencumbered by the need to constantly check a clock to track time.
At TPC, we tell prospective clients in advance what our fees will be so they know exactly what it will cost. We don’t accept payment from anyone but our clients. Our client’s well-being always comes first.
A Holistic Approach
Most financial firms focus solely on investments, whereas at TPC, we view investments as one piece of a client’s comprehensive picture. We strive to understand how a client’s finances integrate with their entire life. It’s a holistic approach that acknowledges the reality that every client is different. It also requires a much deeper dive where we sort through layers of complexity. I’ve never had a client say it wasn’t worth it.
If you would like to learn more about the benefits of working with a fee-only fiduciary, call The Planning Center. We’re ready to help you start building wealth today.