Physician’s Ultimate Guide to Choosing a Financial Planner – Part 4: Best Financial Planners for Type 2A Physicians
October 31, 2024
Best Financial Planners for Type 2A Physicians:
A fiduciary, fee-only Advice-Only financial planner who charges a flat fee or an hourly rate.
Once you’ve made the decision to manage your investments yourself, you are looking for an Advice-only financial planner – one whose value is not managing your money but empowering you to do so on your own sustainably. Without an AUM fee to charge, advice-only planners may charge a flat fee or an hourly rate for their services. Reasonable rates are usually between $200-500 an hour depending on what is included. Flat fees are often priced based on expected hours of work for the financial planner (e.g. if ~10 hours of work involved, the flat fee could be between $2000-5000).
Great advice-only financial planners take the time upfront to help understand your goals and values, and if necessary, help you clarify them. By understanding your values as well as your attitudes/psychology toward money, they can help come up with a comprehensive plan for you to follow that is specific to you and your family. The value they provide is helping you address your blind spots, provide an objective assessment of your current situation, a projection of what you need to do financially to live the life and career of your dreams, and giving you a blueprint to follow so you can make it happen.
Pros of Advice-Only financial planners who charge a flat fee/hourly rate:
- Fees are 100% transparent. You know exactly what you are paying the planner and can make an educated decision about whether the value is worth it prior to engaging with the planner.
- Compared to working with an AUM planner, working with a limited-engagement Advice-Only planner and self-managing your finances can save you hundreds of thousands if not millions of dollars in fees over 30 years.
- From the financial planner’s perspective, your long-term value as a client is not the fees you pay but the referrals you provide of future clients. They are incentivized to make you happy, so you sing their praises to other prospective clients and bring them more business.
- You will gain the knowledge, perspective, and the mindset to implement your own financial plan.
Cons of Advice-Only financial planners who charge a flat fee/hourly rate:
- Unlike an AUM financial planner, you will pay the same amount if you have $10k or $1M in assets. This creates the opposite scenario where advice-only planning may be less affordable for early-career physicians compared to later-career physicians. This is especially true if you are an early career physician saddled with student debt. Discounts to physicians in those groups may help alleviate this inequity in access.
- Financial planners who charge an hourly fee will be incentivized to work with you and bill more hours. Those who charge a flat fee will be incentivized to get the job done with as few hours as possible. There is a conflict of interest either way.
- Once the engagement is complete, and the financial planner has provided you the promised deliverable (a completed financial plan), nobody will be holding you accountable. There is a risk of you being a “non-compliant” client who has the perfect financial plan to follow but doesn’t implement it because life gets in the way. (As opposed to an AUM client who pays far more, but implementation is guaranteed because it is delegated.)
- If your financial situation changes or new questions arise after the engagement is over, you have a financial disincentive to re-engaging with a financial professional because it would mean paying more money out of pocket. (Similar to a patient who is reluctant to seek care because they haven’t met their deductible.) Even if you do re-engage, the planner may not remember your details and may (rightfully) bill you for the hours required to get reacquainted with your situation.
- Flat fee/Hourly financial planning practices are harder to find than AUM and subscription model practices (see Part 5) because the practices are not as scalable from a business perspective and require constant referrals. Like many doctors, many financial planners also prefer a practice setting where they can enjoy a long-term relationship with clients and their families rather than a practice with a lot of churn.
If you are a Type 2A 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 hourly rate/flat fee financial planner 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.
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.