Cost Benefits of Financial Planning

Are you getting what you pay for?

Cost benefits of financial planning shows dollar puzzle

Why pay fees for financial planning when you can do it yourself, right? There are cost benefits of using a financial advisor that go beyond merely increasing wealth and financial gain. Strategies like risk management, improving your happiness, timeliness, and behavioral management can make using a professional financial planner worthwhile.

FEES

When we meet with prospective clients, the elephant in the room is usually fees. The plain truth is, some financial impacts are harder to measure than others. In 2015, Michael Kitces endeavored to quantify these values in the Kitces Report, Vol. 3. Including data from Vanguard, Morningstar and others, the report analyzes the potential quantifiable benefits you may gain that go way beyond any fees charged when you work with a financial advisor. Additional benefits are:

      • Financial Gain
      • Risk Reduction
      • Well-Being Enhancement
      • Behavioral Change

*Results may vary and cannot be guaranteed.

POTENTIAL ECONOMIC IMPACTS OF FINANCIAL PLANNING STRATEGIES

To help you visualize the benefits, the chart below aims to quantify financial planning strategies and their potential impact:

Cost Benefits of Financial Planning Chart

Chart reprinted with permission. Click image to view PDF.

 

As you can see, the cost benefits of some planning recommendations are quantifiable, like tax-advantaged strategies. Others, like improved saving and spending habits and general financial advice, are harder to assess. The Kitces’ Report chart and article provide some context on how a financial advisor’s skills may add value that may not be possible when you do your own planning.

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