My Financial Planning Practice – Ten Things I Did Right and Wrong

I’ve been a financial planner my whole adult life – half in corporate financial planning and half in personal financial planning. Looking back at my personal financial planning practice, there are some things I’ve done right and some mistakes I’ve made along the way.

While not for everyone, here are some things to do and not do.

Things I did right:

1. Billing hourly. This is not the right model for all planners or consumers, but it was right for me. The question I asked was that every profession on earth (doctors, lawyers, accountants, etc.) is fee-for-service, so why should financial planning be any different? Though this fee model didn’t eliminate all conflicts, it minimized them. I could recommend paying down a mortgage or evaluate a pension option (rollover to IRA versus monthly payout) without a financial conflict.

2. Stressing simplicity. In 2009, I wrote a book, How a Second Grader Beat Wall Street, using a three- to five-fund portfolio. It’s in first place among the Dow Jones MarketWatch Lazy portfolios. I never dreamed a book about investing being so simple that an eight-year-old could do it would result in attracting so many new clients. But it did. There are complexities (taxes, fees, gated redemptions, etc.) in moving toward simplicity, and that is the business I’m in.

3. Not choosing a custodian. I advise on well over $1 billion in assets annually (typically different clients every year), yet I have zero assets under management with no discretionary authority. I can’t make a single trade. I let clients use whichever custodian they’d like. I will often work with custodians to get clients an “acquisition award,” which often more than pays for my financial planning fees. One recent client got a $20,000 acquisition award for moving securities to a well-known custodian. By not using a custodian or an advisor platform, it simplifies my practice greatly.