Physician’s Ultimate Guide to Choosing a Financial Planner – Part 5: Best Financial Planners for Type 2B Physicians
Best Financial Planners for Type 2B Physicians:
A fee-only, fiduciary, Advice-Only financial planner who charges a subscription model.
Like your Type 2A colleagues, you too want an Advice-Only planner who is not going to manage your money for you but give you valuable guidance to help you do it yourself. But instead of a limited engagement, you want to retain access to a trusted financial planner even as you self-manage your finances. Enter the subscription model financial planner who has replaced fee-for-service with a concierge-style membership fee. The promise is the best of both worlds – access to an ongoing relationship with a financial planner without costly AUM fees. Reasonable fees will vary depending on the services and value offered. As mentioned above, $200-500/hr is generally a reasonable hourly rate, so if a planner is charging $500 a month, you should expect the planner to be providing around 1 to 2 hours of work on your behalf each month.
As with their hourly or flat-fee counterparts, great subscription-model Advice-Only financial planners will also take the time to understand your goals and values and create a financial plan for you to implement. However, they will stay connected to you after the initial financial plan is delivered, checking in on you, ensuring accountability, and being available for you in case anything changes in your life that requires a change in plan or for questions that arise.
Pros of Advice-only financial planners who charge a subscription model:
- You know exactly how much your financial planning budget will be for a given month or year. You can budget accordingly and make an educated decision about whether the value is worth it.
- Open access to a financial planner throughout the year can be incredibly valuable in ways that are not immediately clear. For example, new financial questions may come up during Open Enrollment season that weren’t even on your radar when you first met with your planner in May.
- Like a patient who has already met their deductible, you have no financial disincentive to reach out for help if questions arise or something changes in your plan requiring another look. This makes it more likely you will get the guidance you need.
- While you still have the ultimately responsibility of implementing your financial goals, you now have a guide or accountability partner monitoring you from afar to ensure you make it happen. This increases the likelihood you are a “compliant” client and check off all the tasks on your financial to-do list.
- From the financial planner’s perspective, your long-term value as a client is not only referrals you generate, but all the potential monthly fees they hope to earn from you if you stay happy with them as a long-term client. They really want to make sure you are a happy, long-term client who sings their praises to other prospective clients and generates future clients.
- You will gain the knowledge, perspective, and the mindset to implement your own financial plan, but you can rest easy knowing help is not far away.
Cons of Advice-only financial planners who charge a subscription model:
- Like fee-based/hourly-rate planners, the initial cost of membership may be less affordable to an early-career doctor paying down student loans compared to later-career physician who have accumulated more wealth. Discounts to physicians in these groups may help alleviate this inequity in access.
- Financial planners are incentivized to accumulate as many fee-paying members as possible; if they go overboard, that can lead to less quality work or time available for each client. As a client, you must have a clear agreement in writing what the minimum level of service is available that should be included with membership. (The planner will almost certainly specify what the MAXIMUM level of service that should be expected.)
- The value of the service provided may change as your own needs, situation and financial sophistication changes. As you need less and less guidance from the financial planner, the cost of paying for that access may no longer be worth it.
- At the same time, financial planners have a disincentive for you to outgrow them with this model – the longer you feel that you need their guidance, the longer you remain a revenue-generating client for them. Breaking up with your financial advisor could get awkward if you reach a point where you’re ready to cancel your membership.
If you are a Type 2B Physician, considering working with us at DocEmpowered! As a financial planning firm founded by a practicing physician and dedicated 100% to empowering financially, our program is designed specifically for both Type 2A and 2B physicians while maximizing value and minimizing conflicts of interest. Learn more about our services.
Alternatively, you can find a great Advice-Only subscription-based financial planners on the National Association of Personal Financial Advisors (NAPFA) Directory or the XY Planning Network (XYPN) Directory – both are reputable organizations who include only fee-only, fiduciary planners who hold the respected CFP® designation in their directories. Make sure you narrow your search to Advice-Only planners, as ~80% of these financial planners will be AUM-based.
Summary
| I Want To… | Best Option | Pros | Cons |
|---|---|---|---|
| Outsource my financial management to a financial planner. | Fee-only, fiduciary “Assets Under Management” (AUM)-based financial planner | Possibly lower initial cost; guaranteed compliance with plan; easy to find | Most expensive option over the long-term; fees potentially less transparent; perverse incentive to maximize amount of money managed; breaking up can be awkward and complicated if investments must be transferred |
| Work 3-6 months with a financial planner, then manage everything on my own | Short-term engagement with a Fee-only, fiduciary, Advice-Only Financial Planner (Flat Fee or Hourly Rate) | Lowest long-term cost; 100% fee transparency; you are paying for advice, knowledge, and guidance – nothing more; no conflict of interest in investment recommendation; no awkward break-up | Potentially high initial cost; no accountability partner; you have ultimate responsibility for follow- through; no ongoing guidance as plans and situation changes; can be tougher to find |
| Manage things on my own with ongoing guidance of a financial planner | Ongoing engagement with a Fee-only, fiduciary, Advice-Only Financial Planner (Membership model) | 100% fee transparency; accountability partner to ensure you stick with plan; ongoing guidance as plans and situation changes; far less expensive than AUM model as assets grow; no conflict of interest in investment recommendations | Potentially high initial cost; value may decrease as you need less help; you have ultimate responsibility for follow-through; breaking up can be awkward; can be tougher to find |
Disclosures: The links above are identical to what you’d find on a search engine, and we receive no benefit or payment if you click on the links above. DocEmpowered is a proud member of XYPN and an Associate Member of NAPFA, and our recommendation stems from our belief in their shared mission to elevate the financial planning industry.