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How to Get Financial Advice You Can Afford
An hourly professional can help you navigate big money decisions
Remie Geoffroi
Key takeaways:
- Paying by the hour can make professional financial advice more accessible.
- About 40 percent of financial advisers offer hourly services.
- When meeting with an hourly adviser, prepare questions in advance to make the most of your time.
Wealthy people aren’t the only ones who need sound financial advice. And they’re not the only ones who can afford it either.
Many financial advisers charge by the hour. These professionals can offer guidance on major money decisions that arise in middle age and beyond, from developing a retirement spending plan to managing finances in a gray divorce to determining what to do with an inheritance.
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Traditional financial advisers earn money by charging clients a percentage — say, 1 percent — of the assets they manage, a model called AUM, or assets under management. Some also earn commissions by selling products such as annuities or life insurance. Many require an investment minimum, generally ranging from $250,000 to $2.5 million, according to the Kitces Report, a research analysis of financial adviser pricing.
Hourly advisers typically charge around $300 an hour and don’t limit their services to high-net-worth individuals. According to the Kitces Report, about 40 percent of financial advisers offer hourly services.
Why consider hiring an hourly adviser
There are a few reasons you might want to tap a financial professional who charges by the hour.
To avoid a costly mistake. Prudence Zhu, founder of Enso Financial in Phoenix, recommends consulting a financial adviser before making major decisions that would be costly — or impossible — to undo.
“If a decision will meaningfully affect the rest of your life and is expensive to unwind, it’s worth a few hours of limited‑scope advice,” she says.
A common scenario she cites is a retiring worker trying to determine whether it’s better to take a pension payout in monthly installments or as a lump sum (and if the latter, what to do with the windfall). Zhu says she also helps clients answer questions about complex topics such as annuities.
To navigate a big life change. Pam Krueger, founder of Wealthramp, an online service that connects people with fee-only financial advisers, says it’s not uncommon for people who have spent their lives socking money away for retirement to need a little help determining when they should stop building their nest eggs and begin to draw down their savings.
Hourly advisers can create or fine-tune a financial road map and help answer questions like how much money to withdraw each month and which accounts to tap first.
In addition, many people retire without a clear picture of their assets, says Sheri Conklin, owner of Conklin Financial Planning in Thornton, Colorado. “They have multiple accounts, they may have several 401(k) plans from different employers,” she says, “so they don’t know where they stand.” Health crises and divorce are two other common situations in which clients seek help sorting out their finances, she says.
To empower you. The shift in workplace savings plans from pensions to 401(k)s and the boom in online brokerages that offer no-fee trading has prompted more Americans to invest their own money, and sometimes they just need a professional to answer a few questions.
“They’ve, generally speaking, done a good job at building some wealth … but they don’t want to make any big mistakes,” says Al Faber, founder of Los Angeles–based DIWY Financial Planning.
How to find an hourly adviser
The language that financial advisers use to describe their business is important. “Fee-only” means they don’t earn commissions by selling investments or insurance products. However, hourly advisers who advertise themselves as “fee-based” may earn commissions.
You can use databases from the National Association of Personal Financial Advisors, Wealthramp and the Garrett Planning Network to find fee-only financial advisers who offer hourly services.
Here are some things to consider in selecting an hourly adviser.
Determine whether you want to meet in person. You might prefer someone local who you can meet face-to-face and who knows your community or region. But if you’re comfortable talking to an adviser by phone or video chat, you can access planners from around the country.
Look for strong credentials. Designations like certified financial planner (CFP) or chartered financial analyst (CFA) can signal expertise, as they require education, exams and adherence to ethical standards. Krueger recommends looking for a “fiduciary,” which means the adviser is required by law to act in your best financial interest.
Don’t overlook personal fit. You want to hire someone who makes you feel comfortable. Many financial advisers offer free consultations, so you can get a feel for whether your personalities jibe. Avoid advisers who pressure you or dodge questions.
Once you’ve selected a financial adviser, Krueger says, it’s important to prepare questions in advance to make the most of your time. At a minimum, you should have details about your retirement account balances, income and debts at your fingertips, she says.
It’s also helpful to know what you’re looking to accomplish. Some advisers offer comprehensive planning, while others focus only on investments or specific issues. “The more clarity you can get around what problem you are trying to solve, the better,” Krueger says.
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