Financial planning has historically been almost inaccessible to young families. 
And this primarily comes down to the way financial planners have charged for their services.

How it has worked in the past

Assets Under Management

The assets under management (AUM) fee model makes a lot of sense for retirees or those on the verge of retirement. The advisor charges a percentage of the assets that they directly manage for the client. And many advisors also require a minimum amount of assets.

Not a problem for someone who has built up a significant nest egg.

But this model doesn’t work well for young families who are either still working to build up a significant amount of assets or have much of their wealth in an employer sponsored plan like a 401(k) which cannot be managed directly by an advisor.

Commissions

The other approach taken by some financial advisors is to work on a commission basis. This involves selling products like permanent life insurance, annuities, or actively managed mutual funds. 

This type of relationship may seem more affordable because commissions are not coming out of your pocket. But the problem is the vast majority of young families have no need for any of the products being sold to them. This creates some significant conflict of interest between the advisor and the family they are working with, which is not ideal.

How things are changing

Luckily, the financial advice industry has recognized these issues and there are new and more creative ways for financial planners to work with young families. Here is how we do it:

1. We operate on a fee-only basis and don’t require any minimum level of assets.
2. We don’t require you to move any of your money under our control – you keep your accounts wherever you’d like (we will of course make recommendations for you and help you execute those).
3. For ongoing planning, we charge a monthly subscription fee that is based on income and net worth – which aims to tie any future fee increases to changes in the complexity of your financial life.
4. We are transparent about exactly what that fee will be – see the details here.

Our goal is to make financial planning more accessible to young families – at a time in your life when adjustments you make can not only impact your current situation, but also have a big and compounding impact on your long term goals.

If you have questions about how we operate, get in touch with us here.

Joe Calvetti is a CPA and the founder of Still River Financial Planning, a comprehensive, fee-only financial planning firm that specializes in working with young families and professionals. Click here to learn more about how we work with clients.

Are you interested in staying up to date on new articles and other news from us? Sign up for our newsletter or follow us on Facebook and Instagram.

Ready to learn more about how we can work together? Schedule an introductory call.

Disclaimer: The information provided above is for educational purposes only and should not be considered financial, legal, or tax advice. You should consult with a professional for advice specific to your situation.