http://www.businessweek.com/printer/articles/87906-financial-planners-online-vs-dot-brick-and-mortar
Admittedly this comes from the perspective of NYC, where everything costs more.
Of course the downside of both businesses is how much time they spend getting to know you and your financial goals. For $5000 they can do a much better job, but for $250 you might be just as happy with a cookie-cutter plan.
Another financial planner, Jeff Rose, works from Illinois. (Where things probably cost less than NYC.) He's stopped doing online plans because he can make more money blogging.
November 2012 Income Report – Does the Streak Continue?
I think the conclusion would be that a $250 plan requires too much time to be worth the income, or else it's going to be done quickly by someone with little experience.
I'm not a fan of the $5000 planner, either.
I think the best compromise still lies with a combination of DIY and a fee-only planner who can check for mistakes. But when you've done your own planning and had it checked out here, I don't think there's much left for a fee-only planner to suggest.
After that it's a matter of how much hand-holding and "stay the course" pep talks you want to buy.
Admittedly this comes from the perspective of NYC, where everything costs more.
We went to visit our financial planner-to-be and were immediately reassured by the Park Avenue address, a well-appointed waiting room with crown molding, and framed photos and letters from happy, affluent families. To top it off, the planner was a fee-only shop, which meant it earned no commissions from the financial products it recommended. (This is really the only kind of planner you should ever talk to.)
My wife and I had a lengthy conversation with the two owners of the firm and an associate. They asked us roughly 972 questions, which may sound tedious but was actually delightful. First off, the questions were about ourselves, so that’s fun; in this way, financial planning is very much like psychotherapy. Second, we felt that every question brought us one step closer to our sustainable, responsible financial future. It was like the financial equivalent of exercising.
We left the advisers’ offices excited and relieved. Our money would be properly allocated, our investments guided to the most efficient mutual funds, and our spending kept within bounds—all by sensible, highly educated men and women in really, really nice suits. All we had to do was furnish the firm with our most up-to-date financial information and fill out a questionnaire together to assess things like our tolerance for risk.
Oh, and we had to pay them $5,000.
Then I read an article about online financial-planning websites like LearnVest, NestWise, and Plan & Act that offer similar services for far less. I could think of 5,000 reasons to look at the alternatives.
I signed up with NestWise, which was founded by a Wharton professor. For $250, NestWise would match you to one of its 17 advisers. Your adviser would craft a detailed financial plan that you would execute. All we had to do was furnish the firm with our most up-to-date financial information and fill out a questionnaire to assess things like our tolerance for risk.
Sound familiar? That’s what struck me. In practice, this wasn’t terribly different than what Park Avenue was offering. In both cases, all my wife and I were seeking was a road map for our finances: Save X each month in your 401(k)s, set aside this much to grow your emergency fund, and so on. Whether that was done in an office of fine leather and rich mahogany or on my laptop while I, pantsless, ate Hot Cheetos was immaterial.
Of course the downside of both businesses is how much time they spend getting to know you and your financial goals. For $5000 they can do a much better job, but for $250 you might be just as happy with a cookie-cutter plan.
Another financial planner, Jeff Rose, works from Illinois. (Where things probably cost less than NYC.) He's stopped doing online plans because he can make more money blogging.
November 2012 Income Report – Does the Streak Continue?
I tested out offering financial plans on my site for $500 at the beginning of the year and I’ve had some people take me up on the offer. One month I had four people contact me. With increased demand I raised the fee to $750 (and one case $1,000) but people still kept calling. With such high interest you’re probably wondering why I would be giving up what seems like a sure thing.
Here’s why: they take way too much time. To do a financial plan right, it will take me anywhere from 6-8 hours to complete. As my online business grows, I’ve realized that my time can be spent better elsewhere. Case in point example: my niche sites.
This month was a record month for my new niche site with over $3,400 of revenue. Not too shabby. I think I’ve mentioned that I’m building out a secondary niche site to compliment the main one. What I don’t think I’ve mentioned yet is that I secured 2 new domains that I’ll be building out in 2013.
As your online business grows you’ll realize that certain paths you started down don’t make as much sense as they once did. I know I’ve learned that several times.
I think the conclusion would be that a $250 plan requires too much time to be worth the income, or else it's going to be done quickly by someone with little experience.
I'm not a fan of the $5000 planner, either.
I think the best compromise still lies with a combination of DIY and a fee-only planner who can check for mistakes. But when you've done your own planning and had it checked out here, I don't think there's much left for a fee-only planner to suggest.
After that it's a matter of how much hand-holding and "stay the course" pep talks you want to buy.