Finding new ways to service the mass market with affordable Financial Planning has been an aspiration in the US and the UK. Sheryl Garrett CFP® is one of the pioneers of a new us model aiming to reach the mass affluent.

Prior to starting my hourly-charging practice in 1998 I was a partner in a successful wealth management firm. We offered one service, comprehensive Financial Planning and portfolio management, for a high income or high net worth clientele.
Hiring us for a more limited scope, for a shorter-term engagement was not an option. This service model may be very appropriate for many practitioners and their clients, but it was too specialised to meet my personal and professional objectives. I always felt a sense of remorse when I had to turn potential clients away because they did not meet our client profile or account minimums.
Also, while working for clients on an annual retainer basis I began to feel increasingly burdened by the amount of ongoing responsibilities. Eventually I came to the realisation that I wanted to serve regular people and do-it-yourselfers, people like me who were being overlooked or underserved by competent, objective financial advisers.
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I spent a decade as a staff planner, registered representative, and as adviser to high-net-worth clientele.
I've had exposure to most traditional financial services distribution channels in the US and have had to discover for myself what business model fitted me best and the clients I wanted to serve. I knew I wanted to be able to serve all people, regardless of net worth or income level; and as a professional, I wanted to be in control of my work life and work product. It took me over 10 years but I finally found a fit for me and truly fell in love with Financial Planning. Fee-only, hourly, as-needed Financial Planning and advice was the right fit for me and the clients with which I wanted to work.
I'm a firm believer that everyone needs access to competent, objective
financial advice at some time or another. But, virtually no one needs a full time Financial Planner. I also believe that there are a lot of people who are not interested in turning over control of their investment portfolio or financial affairs to anyone. However, they need to be able to tap the wisdom of a financial adviser periodically, possibly as often as several times a year. And they will pay for the services as needed and used.
Fee-for-service financial advice, and even more so, time-based billing, was not yet known to many of my prospective clients. Working in an untapped market such as the mass market and with do-it-yourself clientele was revolutionary in my community when I first introduced the services. But, fortunately others found the idea attractive and within two years I had to stop taking on new clients or expand my support and advisory staff, which is exactly what I chose to do.
I also chose to not manage assets on a continual and ongoing basis and I chose to make sure that I could tailor my services to exactly what I felt the client needed from me at any given point in time. I referred to this as "hourly, as-needed" service. It's not that the client determined when services were needed, but rather I would recommend what services were needed and what frequency they should be reviewed. Of course, the client was always welcome and encouraged to contact me should they desire more frequent "check- ups".
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One of the earliest articles about my Financial Planning practice described my office environment and client engagement process, as similar to that of a dentist's office. After working with a client we scheduled a follow-up visit often six months or one year in advance, and they paid on the way out the door just before booking their next appointment, very much like visiting the dentist's office. Maintaining good fiscal health requires regular maintenance and check-ups just as maintaining good dental health. The analogy was a great fit and I used it frequently in describing my services – I also warned that hopefully it wouldn't be as painful as visiting the dentist!
The majority of clients that I've worked with ask me something like, "How am I doing?", "Am I saving enough?" or says: "We need a financial review." For the most part, clients were open to whatever recommendations I had as to what they needed to be focusing on at that time. After our initial interview or "Get Acquainted" meeting as we called it, I would suggest to the prospective clients what services should be provided, what documentation was needed, when I could complete the work, and what the total price would be. In over 90 per cent of these initial engagements I provided retirement planning and portfolio reviews. The third and fourth most common services were education funding and life insurance needs analysis. These subjects came up fairly frequently, but sometimes would not be addressed until a subsequent engagement, if they were needed at all.
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I really tried to put myself in my clients' shoes and focus on what money and resources they had available to pay for my services and any other goods or services needing to be purchased based on my advice. I rarely provided a comprehensive financial plan in the first engagement. I marketed my services as hourly, as-needed Financial Planning and advice for everyday life. I wanted to be able to tailor the services and the cost of the services to focus on the most critical and urgent aspects immediately. In time, we may complete all aspects of a comprehensive financial plan, or at least the essential topics would be covered.
When I opened my hourly practice in 1998 I had two key differentiators between my firm and other fee-only financial advisers in my area. I did not work under retainer or any ongoing contractual agreement with clients. I had no minimums of any sort... other than I did wish to have my invoice paid. And I charged my fees based on time rather than assets.
I strongly believe that we will see more time-based as opposed to asset-based fee computations being embraced as the profession emerges. Computing our fees based on the time and complexity involved should result in a fairer compensation to the professional as well as the client.
My personal goal was to bill 800 hours per year, which was 50 per cent of the time I made available for my Financial Planning practice. My hourly billing rate was $180 USD (approx £110) in 2005 when I stopped working with individual clients, although it should have been higher. I had one full-time lead planner who worked with new clients. This adviser was paid 2/3rd of her billable rate, also $180, and as owner of the firm I retained the other 1/3. We also employed two part-time staff planners who provided data entry and some client support services. They were compensated 1/3 of their billable rate, which was $150/hour. I retained the balance. They typically billed out over 70 per cent of their time.
This simple model is commonplace with law firms in the US. The owners and lead professionals receive a higher share of the revenues due to the fact that they have the responsibility of bringing in new clients, supervising staff and maintaining firm compliance. Given that there are only so many hours in a day, leveraging my firm's ability to service more clients by adding professional staff enabled me to serve more people and make more money than I could as a solo practitioner.
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Time-based fees place the burden of being efficient with our time and estimating the scope of an engagement in advance with the practitioner, and that's where it belongs in my opinion. Currently the majority of Financial Planners in
the US charge a combination of fees and commissions. Another group of Financial Planners charge a fixed fee for the Financial Planning work and an asset-based fee for the portfolio management services. Those who exclusively manage portfolios typically charge an asset-based fee for their services. However, most fee-only planners wrap Financial Planning fees in with investment management fees and invoice quarterly and distribute with their performance reports. I personally have done this, but
strongly oppose this way of charging fees due to the fact that clients often tie the practitioner's value add to the performance of the investment portfolio alone, and severally discount the value of planning.
As fiduciary advisers we must ask ourselves if we are the most appropriate provider for all of the client's specific needs. If we are not, it is our duty to refer those activities out to a qualified specialist. In the US fee-only planners have been outsourcing the implementation of insurance to specialists, most of us don't prepare income tax returns for our clients, but instead we outsource that work as well. And over the last few years we've seen many options to outsource ongoing money management services. Money management is a commodity. Prices are coming down. A personal Financial Planner's skills and services cannot easily be replaced, outsourced or automated, although the right technology can dramatically assist in the management of one's practice. It's the trusted and very personal relationship we have with our clients that makes this possible.
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As I consider hourly, as-needed advice in the UK and other developed markets across Europe I am extremely optimistic. The regulatory changes banning commissions changed the landscape drastically. No longer do you have to educate the public about fee-only as the only option. Now the differentiation lays in what services you provide, to whom and how you charge for your services.
The media, the public and tens of thousands of clients have made it perfectly clear that having access to a competent, fiduciary adviser on their terms, is exactly what they're looking for. And this demand is not a US phenomenon it's a personal preference shared by many people all around the world. Everyone has questions about their financial lives at one time or another. The hourly, as-needed approach I used in my practice, which is now embraced by the over 300 members of the Garrett Planning Network, continues to illustrate the success of this service model and that public demand is there and growing.