ACP: A Different Way of Doing Business
ACP members are innovators in fee-only financial planning. See the ACP difference by following the money paid to advisors. See how the fee-only financial planning method differs from the product sales, asset gathering, and comprehensive planning approaches.
The Product Sales Approach
Financial planners who use the product sales approach make money only when you purchase the investment or policy they are selling. Different products pay different commission amounts, and because the commission is included in the overall price of the product, you may have no idea how much you are actually paying for the product. These types of financial planners may supply you with a document called a financial plan, but there's nothing personal about it.
Stockbrokers and mutual fund salespeople are paid to sell you investment products, particularly those offered by the company they work for.
Life insurance salespeople are paid to sell you life insurance policies. They will promise you that there is an insurance policy (or annuity) for all of your financial needs
CPAs and tax professionals selling you your IRA may seem a natural fit, but you still end up wondering whose interests are being served.
Fee-based planning is similar to fee-only financial planning but not synonymous. A fee-based planner can also earn commissions for product sales. Ask your advisor if there is any condition under which he or she would receive a commission. For a true fee-only planner, the answer will be a resounding "no."
What Makes ACP Different?
We believe you shouldn't ever have to wonder if you are receiving a recommendation because it's best for you or best for your advisor. Transformation takes place in the context of relationships, not transactions. Ongoing, active client participation and integration of the client's finances, goals, and values leads to financial independence and peace of mind.
Scope of Services
ACP members are best known for offering an open retainer agreement. You pay one annual fee and receive ongoing access to your advisor throughout the year. This open communication is critical to achieving your financial goals.
When you are a retainer client, your advisor will review every aspect of your financial situation: taxes, investment portfolio and strategy, insurance, estate planning, goals, cash flow, money personality, special needs, and more. You'll receive recommendations that are integrated and appropriate to your situation.
Advisors who are salespeople owe their loyalty to the company that employs them, not to their clients. With ACP, clients come first.
The Asset Gathering Approach
Financial planners who use the asset gathering approach are generally paid a percentage of the assets under their management. Therefore, it is very important to them that they manage as many of your assets as possible and, for obvious reasons, tend to focus on high net worth clients. This approach and its compensation is easier to understand than commissions but is not without its conflicts of interest.
Not all assets are eligible to be managed by a money manager. For example, your 401(k) or 403(b) retirement plan and your personal residence don't count as assets under management, even though they may be key pieces of your personal net worth. So what happens when you're trying to decide whether to roll over your retirement plan into an IRA or pay off your mortgage? Could these transactions affect the compensation of your advisor? Does it make you wonder if you're receiving unbiased advice?
ACP’s Functional Asset Allocation
The premise of this revolutionary approach is that each asset category serves an important function or purpose in people's lives and that understanding these unique functions allows the use of assets to be optimized. Real estate, in the form of the personal residence, is a prime example. While it can be the largest investment a family has, provides the best protection against inflation, and adds value beyond a financial calculation because of the personal enjoyment derived from its use, most money managers do not include it when constructing an asset allocation strategy.
The Comprehensive Planning Approach
Most financial planners say they offer comprehensive financial planning, and anyone who carries the Certified Financial Planner designation has been trained in comprehensive financial planning. While we're fans of comprehensive financial planning, we believe that that too many planners who say that they offer comprehensive planning don't fulfill that promise. Here are a few things to consider in determining just how "comprehensive" a planner truly is:
- How much time is spent discussing your goals before recommendations are made?
- What role does your advisor play in your income tax preparation?
- Does your advisor review your estate planning, insurance, cash flow, recordkeeping, and income tax planning needs in addition to your investments?
- Do you have to pay more if you need to contact your advisor between appointments or if a change in your situation requires your plan to be updated?
Aligning with True Comprehensive Planners
ACP members understand you are more than numbers in a spreadsheet. By assessing your overall financial picture, they can better address your needs and goals. Working with an ACP fee-only financial planner ensures you have ongoing access to your advisor for one set rate. This also enables you to develop a relationship with your advisor, providing you with ample opportunity to reach your financial goals.
Find an advisor who will assess your estate planning, insurance, cash flow, recordkeeping, and income tax planning in addition to your investments.