I have a question for you, how much did you pay your financial advisor last year? I’ll bet you don’t know. It’s ok, most people don’t. And it’s largely because the industry intentionally keeps you in the dark.
Recently we had a client (let’s call her Jennifer) transfer to Kind Wealth because she wasn’t happy with her existing advisor (let’s call him Rick). As a young professional and single mom, Jennifer wanted to know she had a sound financial plan in place to provide for her kids.
When she broke the news to Rick that she was transferring her accounts out, he wrote back giving her a guilt trip. He argued that she had benefitted greatly by working with him over the years, benefitting from his 25 years of industry experience. He pointed out that his fees had been paid to him by the investment and insurance products he had recommended to her and because of this she had never been sent an invoice for his services.
Rick went on to point out that since, after fees, Jennifer’s investments had matched or beat the market this meant that “the net result was that it cost (her) nothing to receive (his) help.”
Pretty compelling right? It certainly seemed to make Jennifer feel guilty. I suppose that’s why she forwarded me his email. Rick’s basic argument was that she was better off with him than she would have been on her own. Maybe. But that’s not the point.
The point is Jennifer didn’t feel confident she was financially secure or that she had a plan in place to get financially secure. She was and is still worried about providing for her children. She doesn’t feel empowered and she hadn’t heard from Rick in over three years.
The worst part of Rick’s response was his claim that his advice had effectively cost Jennifer nothing. When I did the math, I showed her she had been paying over $3400 annually for her investments (of which her advisor was collecting close to $1500 annually).
For the record, typical fees for financial advice in Canada run anywhere from 0.5% to 2% (of the amount you invest) annually. At a 1% fee that works out to $500 per year on a $50,000 investment account. At $200,000 you’re paying $2000 annually. This fee gets quietly gets siphoned from your investment accounts. It’s intentionally set up this way so that your fees are out of sight and out of mind.
Keep in mind, paying $2000 or more for good financial advice may well be worth it. But the price we’re paying should be made crystal clear to us. This way we can say whether we’re getting good value for our money.
In this case, Rick had boasted about how Jennifer had never received an invoice for his services when that’s precisely the problem! Canadians are paying thousands of dollars a year for financial products and advice and many have no idea.
It’s mind-boggling. Stop and think of the last time you spent over $1000 on anything. Maybe it was a household appliance, a vacation, or a mortgage payment. Whatever it was, I’m guessing you thought carefully about whether it was worth the money. I can’t think of anything else Canadians pay so much for that they’re so unaware they are paying.
That’s why when I started Kind Wealth I wanted to use a pricing model that delivered ultimate transparency. I didn’t want clients working with us because they didn’t know how much we charge. I wanted clients who valued our help so much they felt good about paying our fees.
So Kind Wealth charges flat-fee monthly subscription pricing. It’s how we pay for everything else these days, including Netflix, Spotify, our meal deliveries, the software we license, etc. This means that clients don’t have to do the math to translate a percentage fee into a dollar amount. Our fee gets charged directly to our clients’ credit card each month. This way they know exactly what they are paying, can collect credit card reward miles, and decide whether they value our service enough to continue paying for it.
Keep in mind, paying $2000 or more for good financial advice may well be worth it. But the price we’re paying should be made crystal clear to us. This way we can say whether we’re getting good value for our money.
In this case, Rick had boasted about how Jennifer had never received an invoice for his services when that’s precisely the problem! Canadians are paying thousands of dollars a year for financial products and advice and many have no idea.
It’s mind-boggling. Stop and think of the last time you spent over $1000 on anything. Maybe it was a household appliance, a vacation, or a mortgage payment. Whatever it was, I’m guessing you thought carefully about whether it was worth the money. I can’t think of anything else Canadians pay so much for that they’re so unaware they are paying.
That’s why when I started Kind Wealth I wanted to use a pricing model that delivered ultimate transparency. I didn’t want clients working with us because they didn’t know how much we charge. I wanted clients who valued our help so much they felt good about paying our fees.
So Kind Wealth charges flat-fee monthly subscription pricing. It’s how we pay for everything else these days, including Netflix, Spotify, our meal deliveries, the software we license, etc. This means that clients don’t have to do the math to translate a percentage fee into a dollar amount. Our fee gets charged directly to our clients’ credit card each month. This way they know exactly what they are paying, can collect credit card reward miles, and decide whether they value our service enough to continue paying for it.
Keep in mind, paying $2000 or more for good financial advice may well be worth it. But the price we’re paying should be made crystal clear to us. This way we can say whether we’re getting good value for our money.
In this case, Rick had boasted about how Jennifer had never received an invoice for his services when that’s precisely the problem! Canadians are paying thousands of dollars a year for financial products and advice and many have no idea.
It’s mind-boggling. Stop and think of the last time you spent over $1000 on anything. Maybe it was a household appliance, a vacation, or a mortgage payment. Whatever it was, I’m guessing you thought carefully about whether it was worth the money. I can’t think of anything else Canadians pay so much for that they’re so unaware they are paying.
That’s why when I started Kind Wealth I wanted to use a pricing model that delivered ultimate transparency. I didn’t want clients working with us because they didn’t know how much we charge. I wanted clients who valued our help so much they felt good about paying our fees.
So Kind Wealth charges flat-fee monthly subscription pricing. It’s how we pay for everything else these days, including Netflix, Spotify, our meal deliveries, the software we license, etc. This means that clients don’t have to do the math to translate a percentage fee into a dollar amount. Our fee gets charged directly to our clients’ credit card each month. This way they know exactly what they are paying, can collect credit card reward miles, and decide whether they value our service enough to continue paying for it.
About the Author
David O’Leary is Founder & Principal of Kind Wealth and host of The Impact Investing Podcast. He is the former Managing Director of Origin Capital; a provider of high-impact investments that provide an opportunity for the world’s most vulnerable people in the hardest to reach places. Read Dave’s bio or connect with him on LinkedIn.
