For our Fintech Spotlight segment this month, we are featuring our sponsor, Facet Wealth. They make working with a Certified Financial Planner professional simple and convenient.
I’ve invited a founding member and the Chief Evangelist of Facet Wealth, Brent Weiss to tell us more about this virtual financial advising company and how it’s helping clients of all wealth levels achieve their goals. We’re also going to discuss the importance of working with a fiduciary and defining what financial planning looks like.
Andy Hill: There are a lot of definitions of financial planning. How do you define it?
Brent Weiss: I always like to start with a definition that is not accurate. Most people think financial planning is this incredibly complicated, long, expensive process that's meant for people with a lot of money.
The first thing I want the listeners to understand is … throw that definition out the window. Get rid of it.
I'm a firm believer that everybody could benefit from comprehensive financial advice that's simple and transparent.
There are 5 things that I believe financial planning is.
1. Comprehensive
It looks at all facets of your financial life, not just your investments. And it focuses on today and not just tomorrow.
2. your Overall Financial Health And Wellness
For a lot of families, it's about improving their money habits as the foundation of creating success long term.
3. Empowering
It's about helping families take control of their finances so they can understand it's possible to achieve their financial goals.
4. Every Day
A lot of times financial planning looks at these goals that are 20-30 years off. And I'm a firm believer, and here at Facet Wealth, we like to think that we should live our best life today while also planning for a more secure tomorrow.
5. Personal
Finances are very personal. They touch every aspect of our lives, our families, and you deserve to work with someone that you know and you trust. And that comes down to working with a dedicated CFP professional and making sure it's the right fit for you.
How can you find a good financial advisor?
Trust is not something that occurs overnight. Trust takes time. It's the credibility, the rapport, the relationship you build with somebody.
But here's the good news, the Certified Financial Planner Board of Standards put together a great list of questions you can ask an advisor before you engage in the relationship.
Here are 5 of my favorite questions from the list:
1. What is your experience and what are your qualifications?
You want to find someone that has the experience and education to help you where your family is today.
2. What services do you offer and what can I expect in the relationship?
There should be full transparency in terms of what they're going to provide. Remember, it should be comprehensive and look at all facets of your financial life.
3. How do you charge for your services?
Most advisors charge a percentage of assets.
I'll tell you this, there's no right or wrong answer. We're believers in the flat fee. That doesn't make it the right situation or solution for you, but ask the advisor how they're paid so you understand upfront what to expect in the relationship.
4. Are you a fiduciary?
Most of the industry, oddly enough, Andy, is not. They're not held to the fiduciary standard. So make sure you ask the question upfront. You have a right to know if someone's going to do what's right and best for you.
5. Do I get a dedicated financial advisor?
We just talked about how financial planning is very personal and make sure you can work with somebody because if you want to build trust. You want an advisor that's there for you for good times and bad, and you know they're going to have your back and do the right thing for you throughout the planning relationship.
What does being a fiduciary mean?
I'll keep it simple. A fiduciary, by definition, is simply someone that must do what is in your best interests. They must put your interests ahead of their own from a professional and personal perspective.
It seems very simple. In the financial services industry, that is not a standard. A financial advisor may not actually live by the fiduciary standard, which is why I typically recommend working with a CFP professional.
That's what we hire here at Facet Wealth to make sure that you always know that legally and ethically, your financial advisor's bound to that fiduciary standard and will always do what's right for you in the relationship.
How can people know if their current financial advisor is a fiduciary?
The simplest thing is to ask.
Just go to your financial advisor and say… “Look, I'm very happy with the work we're doing together. I just want to understand, are you a fiduciary and are you held to that standard?” That's the most obvious way to do it.
The second thing is you can look at their credentials or qualifications. We've been talking about the CFP professional designation, Andy. Individuals that hold that designation, and others, are legally and ethically held to the fiduciary standard.
The last thing is, there's this term out there, RIA. It's a registered investment advisory firm. If a firm is an RIA, all of their employees are also held to a fiduciary standard.
So there are ways to find out without asking directly, but in my opinion, a simple way would just be to ask your advisor, “Are you a fiduciary, and am I getting that kind of care?”
Financial advisor fees can be confusing. How can we understand what our current financial advisor is charging us?
I think it should start with a conversation around, “Hey, we're approaching a transitional point in our life, and we have some big decisions. I just want to really go over the services that are being provided. And, ultimately, how we're paying for the services that you're offering.”
For me, I do believe just asking because if you're working with a true quality financial advisor that believes in transparency, they will have no problem showing you exactly how they're paid. If they have a problem showing you, I think that might be a warning sign.
It isn't always a warning sign, but it might be a warning sign that there's something else in that relationship that might create a conflict of interest or someone isn't interested in sharing.
The RIAs have to publish documents with the various regulatory bodies. And so you can find that information online if you want to go that far and look.
But the simplest thing is to ask your financial advisor, “How are you paid for the services you're providing? And then what does that look like from a relationship perspective?”
Related Article: How to Leave Your Financial Advisor in 5 Simple Steps
Since you follow the fiduciary standard at Facet Wealth, does that make it harder for your company to make money?
This is the easiest question of the day, and absolutely not. There's no other way to run a business than by starting with, at square one … “what is the best thing for the client?”
The first thing you want to do is take great care of your clients. If you do that right, do what's best for them, if you're transparent, you do an excellent job, deliver a great client experience, everything else will fall into place.
So at Facet Wealth, what we've said is, “We are all CFP professionals, all of our lead planners are. We're going to hold ourselves to that high standard, and then we're going to figure out how to build the business around what is right for our clients first.”
How does Facet Wealth charge for its services?
Most financial advisors charge a percentage of assets. If they're managing assets on your behalf, they'll charge typically 1%. That's normally an average.
At Facet, we decided to change that a little bit. Our mission as a company is to make high-quality financial advice through a dedicated advisor. That's a
CFP professional.
We want to make that more affordable and accessible to more families. And so in our opinion, we believe a flat fee makes more sense.
Think of it as a subscription fee. That just relates to individuals that are now signing up for Hulu, Netflix and Amazon Prime.
We charge a flat monthly fee. It starts at $40 per month. If you annualize it, that's $480 per year. It goes up from there to just upwards based upon two things:
- The services that make sense for the individual
- The family and the complexity of their landscape.
Now I will say, at the higher end for more complex situations (small business owners, etc), it's about $5,000 per year. But here's what I can tell you, Andy, most of our clients, their monthly fee is actually lower than a cell phone bill or their cable bill.
I always ask, “What's more important … financial security, financial independence, or watching your favorite sort of cable show or Netflix show?”
I'll leave that up to the listeners to decide which one is, but that'll give you a sense of how we charge and then ultimately what that fee can look like for families I work with Facet Wealth.
Does someone have to have a certain level of wealth to work with Facet Wealth?
No, that's the great thing about the flat fee model starting at $40 per month. We do believe in accessibility to high-quality financial advice. Far too many families didn't have access before.
We decided, “How do we build a model where more families, regardless of net worth, regardless of income, can find a fiduciary CFP professional, and can get affordable access to that?”
So the $40 per month can be a great way for families who don't have investible assets.
If you think about that percentage of assets model if you don't have money to invest yet, how do you get access to that advice from the advisor?
A flat fee is a great way to get started and you can start at the $40 per month and then work your way up with services and complexity. As you start a family and you have kids and you talk about vacation and retirement, all these amazing things in life, you can then adjust that to make sure it's the right fit for you in a relationship.
What is Facet Wealth's opinion on active versus passive investing?
We believe that passive investing, diversification and low costs are key to the success for our families that we represent.
I own the exact same thing that all of our clients own. I'm in a passive low cost, exchange-traded funds (ETFs).
I'm very proud when we go out to our clients and say this is the portfolio we're recommending that it's the same thing. The allocation and risk profile might be different, but it's the same thing that I own and my family owns.
We believe passive investing and the low costs are key because high costs can erode a lot of that wealth and that growth long term. That can make a big difference for a secure retirement for a lot of families.
Related Article: 3 Smart Reasons for New Investors to Choose Index Funds
If someone wants to learn more about Facet Wealth, what's the best way to connect?
The initial call is absolutely complimentary. It's free. There's no cost to it, there's no pressure, there is no sales. There's no commitment or obligation.
We want families to feel comfortable when they call in so they can figure out, “Do I need financial planning?” Because going back to the first question you asked, Andy, a lot of families are saying, “What is financial planning and how does it apply to my everyday financial life?”
What we want to do is take the time to help you understand what that could look like and show you, before you even move forward with Facet, how that could benefit you.
So you walk away and go, “I know exactly what I would be paying. I know the services I would be receiving, and I know at the end of the day the most important thing, how it's going to help my family.”
All of that matters first before you then sign up and start working with your CFP professional. I'm confident it will be an excellent experience, but that's something that every family will work through on their own.
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