The hourly planner's role
I often see interviews and bios about financial planners that “moved on from doing hourly work and into money management.” Is that what hourly work is? A stepping stone? Or can one make a good living by doing hourly, on-demand financial planning? Most of the advisors I see as part of GPN (Garrett Planning Network) are young/rookies or targeting middle income families. Does hourly have no place in the institutional, large account consulting?
Just wondering what the reality of hourly compensation is, as I would like to pursue such a structure if it makes sense.
I can't speak from personal experience on the subject, but it seems to me that with an hourly structure, there are only two ways to increase your income...raise your rates, or work more hours.
Which one of these sounds appealing to you?
True, but with a good reputation and a much larger market (middle income, second opinions, financial checkups for do it yourselfers, etc.) I think a full day of $150/hr. work wouldn’t be too bad. Also, subtract worrying about the size of accounts, market activity and how it relates to the size of those accounts (and therefore how much you get paid). Once again I have very little experience so please don’t think I’m putting all my chips behind one method.
What about an hourly rate with a fixed retainer? A fee-only guy I talked to didn’t like the idea of an AUM fee without the money management, saying that the basis of AUM is that you will do the money management. Do you guys agree?
But don't you think that if someone respected your opinion enough to pay $150/hr for a second opinion, it would be far more profitable for the client to just let you take the account and do it all?
Good luck with that. 40 hours x 150 = 6000 x 12 = 72,000 you will have expenses so you net what 50K
[quote=bankrep1]Good luck with that. 40 hours x 150 = 6000 x 12 = 72,000 you will have expenses so you net what 50K[/quote]
I'm sure your bank is impressed with your ability to think through these abstract thoughts.
All joking aside, I think if you divide the income of a 5th year or 10th year FA by the actual number of hours he/she works, you will find their "hourly" rate will be higher than someone who is literally paid hourly.
I do not view your bank position as inferior, but help me out here and don't write dumb equations. I appreciate your opinions and am sure it was a simple mistake attributed to the 10:25pm post, hopefully you were half asleep.
6k a week before expenses wouldn't be a bad living. I'm sure some desire more, but for many that would be more than they would ever spend.
Forgive me for asking a juvenile question here, but are you talking about hourly rates for solid business, or non-meaningful type business that might otherwise eat up your time?
We don't charge hourly rates - but often times have good clients refer family members or friends who've royally screwed themselves, and essentially won't be of any good to us. However, as a favor to our good clients my Rep will spend some time and offer advice - at the end of the appointment the people always say, "well what do I owe you for today?"
We'd kind of like a way to re-coup the time wasted. $150 for an hour of good financial advice doesn't sound bad to me - if no other revenue were to be earned from these people.
So what do you guys think irae the standard fees for fianancial planning only, or financial planning and money management?