How do you measure value? Is value what is the cheapest? Is value based on what you expect to receive? Is value based on what you do receive? Is there a difference?
If you buy the cheapest product, but it does not deliver what you want was it cheap or expensive? If you buy a quality product and it gives more than you anticipated, was it expensive or a great value? In my life, it has served me well to always buy based on high expectations of what I want to receive and not what is the cheapest. Long-term that has given me better results, better opportunities and led to a happier life.
We as Americans are trained to shop for cheap. So, for many people when they look for anything including financial planning, they are looking for the lowest price. However, when a product is an expertise, somewhat unmeasurable, and hard to compare, how do you know it is the cheapest?
In recent months, I’ve had people tell me that financial planning is not worth 1%. Or they are just astonished to see there is a cost for financial planning, a price for expertise.
Almost 15 years ago I decided to transition to a fee-based model which means we charge a fee for assets under management. When times are good, and our clients do well, we do well, and in bad times for our clients, our cash flow is terrible. But isn’t that what a client should want? Compensation based on performance. It seems to me that it is a good process for us to be on the same side and that the better our clients do, the better we do, the worse our clients do, the worse we do because we want ultimately the same result; for our clients to be doing their best.
We are transparent with our fees. Our fees go to pay for oversight, business structure, advertising, education for self, education for staff, having a well-paid staff, computers, offices, phones and the list goes on and on. It only makes sense to work with someone profitable and successful at delivering a product of quality to their clients.
Cheap versus value, which is better for planning your financial future?
If you had a planner that was financially unsuccessful, do you think you would get good advice? Would you get the best service? Would they be able mentally or physically to put your needs in front of their own if they were financially in trouble?
The next time you consider working with a financial planner, remember that good advice about how to pursue your financial future is priceless. It is not uncommon for me to save clients hundreds of thousands of dollars in their financial planning. We help our clients minimize mistakes from lack of diversification, emotional decisions or decisions made based on the advice from people that make money from you making poor decisions or unjustified decisions.
In my life, I will continue to shop for value, not price. I want quality. I have high expectations for what I’m paying for, and I want something good for my life and my lifetime, not something cheap. How about you?
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.