Hubby and I have had a financial advisor in our lives for over ten years now. It’s both hard to believe it’s been that long and a tad startling to realize how much of our adult lives we navigated without one.
But these days, there are more options than ever for getting financial guidance, including ChatGPT, which one of my friends affectionately calls “Chat Gippity.” LOL.
So, what are your options? How much do they cost? And how do you figure out which one makes the most sense for you?
Let’s dive in!
The Different Ways to Get Advice
Traditional Financial Advisor
This is the approach hubby and I use for our financial planning. Our advisor is a fiduciary, meaning they’re required to put our financial interests ahead of their own when providing advice.
Not all financial advisors operate under the same standards, so it’s important to understand whether your advisor is acting as a fiduciary.
Since we both have full-time jobs and plenty of interests outside of work, hubby and I have no desire to spend the time it would take to develop the expertise needed to manage our entire investment portfolio and financial plan.
We like having a trusted human in our lives who lives and breathes this stuff as a full-time job.
Traditional financial advisors can offer a range of services, including investment management, retirement planning, tax planning strategies, and estate planning guidance. However, not every advisor provides all of these services, so it’s important to understand exactly what you’re paying for.
Many advisors charge a percentage of the assets they manage, commonly called an assets under management (AUM) fee. Others charge flat fees, hourly rates, or a combination of fees.
We’ll dig into those costs a little later, because understanding what you’re paying — and what you’re getting in return — is an important part of choosing the right approach.
Flat-Fee Financial Advisor
Another option is working with a financial advisor who charges a flat fee rather than a percentage of your investment portfolio.
These advisors may offer many of the same services as traditional financial advisors, including retirement planning, investment guidance, and tax planning strategies. The difference is how they charge for their services.
Some charge a fixed annual fee for ongoing financial planning, while others charge by the hour or for a specific project.
For example, maybe you’re approaching retirement and want someone to review your financial situation and help you determine whether you can afford to retire. You might pay a one-time fee for that analysis rather than committing to an ongoing advisory relationship.
Or perhaps you want someone to help you manage your overall financial plan throughout the year, but you’d rather pay a predictable annual fee instead of a percentage of your investments.
One potential advantage of this approach is that your advisory fee doesn’t automatically increase just because your investment portfolio grows.
However, it’s important to understand exactly what’s included. Some flat-fee advisors provide financial planning but leave the actual management of your investments up to you. Others offer investment management as part of their services.
And just because an advisor charges a flat fee doesn’t necessarily mean they’re less expensive. It all depends on what you’re paying and what you’re getting in return.
As with any financial advisor, you’ll want to understand their qualifications, whether they act as a fiduciary, and which services are included before signing on the dotted line.
Online Financial Planning Services
Another option that’s become increasingly popular is online financial planning.
Companies like Facet and Vanguard offer services that combine technology with professional financial guidance, often allowing you to work with an advisor virtually rather than meeting in person.
Depending on the service, you may have access to a Certified Financial Planner (CFP), personalized retirement planning, investment management, and online tools that help you track your financial progress.
For example, Facet offers flat-fee memberships that include access to CFP professionals, while Vanguard offers services that combine automated investment management with guidance from human financial advisors.
Some platforms also offer what’s called a robo-advisor, which uses technology to manage your investments based on your goals, risk tolerance, and other information you provide. These services typically involve less human interaction and may cost less than more personalized financial planning.
One advantage of online services is convenience. You can often access your financial information, track your progress, and communicate with an advisor without ever leaving your home.
And depending on the provider and your financial situation, these services may be less expensive than working with a traditional advisor.
But there are trade-offs.
Some services provide ongoing access to a dedicated advisor, while others connect you with a team of professionals or offer primarily automated guidance. The level of personalized attention, investment management, and financial planning can vary considerably.
As with the other options we’ve discussed, you’ll want to understand what you’re paying for, who you’ll actually be working with, and whether the service can address the complexity of your financial situation.
Because online doesn’t necessarily mean less expensive, and it certainly doesn’t mean one-size-fits-all.
DIY Financial Planning Tools
And then there’s the do-it-yourself approach!
For folks who enjoy managing their own money, have the time to do the research, and feel comfortable making financial decisions, this can be a great option.
There are plenty of resources available to help, including investment research platforms like Morningstar, retirement calculators, and free educational tools from websites like Investor.gov.
You can use these resources to research investments, evaluate your portfolio, estimate retirement income, and determine whether you’re on track to meet your financial goals.
One of the biggest advantages? You can save a substantial amount of money on financial advisory fees.
But there’s a catch.
You’re responsible for making the decisions, monitoring your investments, and adjusting your financial plan as your circumstances change.
And there’s a difference between managing your investments and developing a comprehensive financial plan.
Choosing which stocks or funds to invest in is one thing. Figuring out how those investments work alongside Social Security, pensions, taxes, healthcare expenses, and retirement withdrawals is another.
For some people, that’s an enjoyable challenge. For others, it sounds like a second full-time job.
Personally, hubby and I fall into the second category. LOL.
Neither approach is inherently better. It comes down to your knowledge, comfort level, available time, and willingness to take responsibility for your financial decisions.
And remember, doing it yourself doesn’t mean you can never ask for professional help. You can always consult a financial advisor for a specific question or a one-time financial plan without committing to an ongoing relationship.
AI Tools (like Chat Gippity)
I realize that AI has become this amazing tool that allows us to do ALL THE THINGS! And for some of us, it’s tempting to think AI is an all-knowing being that can help us with financial planning.
Heck, one of my first posts was a ChatGPT retirement analysis prompt you can use to get a hot take on your own financial situation.
But counting on AI to be a comprehensive retirement planning tool is risky.
For starters, AI can be wrong. And sometimes, it can be very confidently wrong. LOL.
It may misunderstand your financial situation, make incorrect assumptions, or provide outdated information. And when we’re talking about decisions that could affect decades of retirement income, those mistakes matter.
That said, I think AI can be an incredibly useful resource.
You can use it to better understand financial concepts, compare different retirement scenarios, explore investment strategies, and even develop questions to ask a financial advisor.
And one of my favorite things? You can ask the same question seventeen different ways until you finally understand the answer. No judgment, no embarrassment, and no hourly bill. 😂
For hubby and me, we’ve found that combining AI with our human financial advisor works well.
Our advisor helps us navigate the complexities of our financial situation and make informed decisions about our future.
Meanwhile, Chat Gippity helps me explore ideas, better understand financial concepts, and think through questions before bringing them to our advisor.
But I don’t treat AI’s answers as gospel. Important calculations, assumptions, and recommendations still need to be verified. And I wouldn’t recommend entering sensitive financial information, like account numbers or Social Security numbers, into a general-purpose chatbot.
The goal isn’t necessarily to replace professional financial advice. It’s to become a more informed participant in your own financial planning.
And personally, I think that’s a pretty terrific use of technology.
Comparing Options
Whew! That’s a lot of options, and there’s no single approach that’s going to work best for everyone.
Here’s a quick look at the advantages and disadvantages of each to help you figure out what might work best for you.
| Option | Pros | Cons |
|---|---|---|
| Traditional financial advisor (AUM) | Personalized advice, ongoing investment management, potentially comprehensive planning | Percentage-based fees can become expensive as your portfolio grows; services vary |
| Flat-fee financial advisor | More predictable costs; fees aren’t directly tied to portfolio size | Annual retainers can still be substantial; investment management may cost extra |
| Online financial planning services | Convenient, often lower-cost than traditional full-service advice; may include access to CFP professionals | Service levels vary; potentially less personalized attention |
| DIY financial planning tools | Low-cost or free options; greater control over your decisions | Requires time, financial knowledge, and willingness to maintain your plan |
| AI tools (like Chat Gippity!) | Accessible, useful for education, brainstorming, and exploring hypothetical scenarios | Can make mistakes, use outdated information, or overlook important details; not a replacement for professional advice |
These categories aren’t mutually exclusive. For example, an online service might employ flat-fee advisors, and someone managing their own investments can still consult a professional periodically.
Show Me the Money!
Now that we’ve covered the different ways to get financial advice, let’s talk about what those services might actually cost.
Because a 1% annual fee might not sound like much, but depending on the size of your investment portfolio, it can add up to some serious money.
For example, let’s compare an advisor charging 1% of assets under management (AUM) with an advisor charging a hypothetical flat annual fee of $5,000.
| Investment Portfolio | 1% AUM Fee | $5,000 Flat Fee | Annual Difference |
|---|---|---|---|
| $500,000 | $5,000 | $5,000 | $0 |
| $1,000,000 | $10,000 | $5,000 | $5,000 |
| $1,500,000 | $15,000 | $5,000 | $10,000 |
| $2,000,000 | $20,000 | $5,000 | $15,000 |
| $3,000,000 | $30,000 | $5,000 | $25,000 |
Holy moly.
At $2 million in managed investments, the difference between these two fee structures is $15,000 per year.
Over ten years, that’s $150,000 in fees, assuming your portfolio value and the fee structures stay the same. And that doesn’t even account for the potential investment growth on money that wasn’t spent on fees.
But here’s the important part: Cheaper doesn’t automatically mean better.
An advisor charging an AUM fee may provide ongoing investment management, comprehensive financial planning, tax planning strategies, and other services that a flat-fee advisor may or may not include.
And some advisors charge additional fees for certain services, regardless of their primary fee structure.
So before choosing an advisor, make sure you understand not just how much you’re paying, but exactly what you’re getting in return.
Because at the end of the day, the goal isn’t necessarily to pay the lowest fee. It’s to get the right value for the money you’re spending.
Garbage In, Garbage Out
But none of this matters if your data aren’t solid.
It wasn’t until recently that hubby and I took a hard look at our monthly expenses and really got our heads wrapped around them.
And we realized we’d been using outdated spending information with our financial advisor for a long time.
Big yikes.
Whether you’re working with a financial advisor, using an online planning service, or asking Chat Gippity to evaluate your retirement readiness, the results are only as reliable as the information you provide.
That means having a realistic understanding of your expenses, income, debts, investments, and future financial needs.
It also means paying attention to the assumptions being used in your financial plan. Things like inflation, investment returns, healthcare costs, and how long you expect your retirement savings to last can have a significant impact on the results.
And don’t assume that just because you provided accurate information five years ago, it’s still accurate today.
Regardless of which approach you choose, you need to take ownership of your financial data and understand the assumptions behind your plan.
Finding Your Fit
So, which approach is best?
Well, that depends on you.
Your financial situation, your comfort level managing money, your available time, and how much you’re willing to spend on financial guidance all play a role.
For hubby and me, having a trusted financial advisor, along with tools like ChatGPT to help us better understand our options, works well.
For someone else, a flat-fee advisor, an online planning service, or managing their own investments might make more sense.
And that’s perfectly fine.
The important thing is to understand your options, know what you’re paying for, and choose an approach that gives you confidence in your financial decisions.
Because the best financial planning approach isn’t necessarily the most expensive, the least expensive, or the most sophisticated. It’s the one that works for you.
🐝 That’s the buzz for today!