Value of Financial Planning

For most purchases in life, it is pretty clear the dollar value of the service or product we are getting in return for our money.

When we walk into a store, we can see the sticker on the item we are considering - $100 for these running shoes, $45 for this shirt, and on and on.

In the service industry, the dollar value of what we are getting in return for our purchase becomes more difficult to quantify.

In starting Lyndale Financial, I designed our fee schedule to be as clear and transparent as possible, as you can see here. Whatever your Net Worth is at the initial time of our engagement determines the monthly fee you will pay over the next twelve months.

This is a great starting point, I believe, as most financial advisors either hide their fees or flat out lie about them. A recent Wall Street Journal article talked about how difficult it was for the reporter to find out exactly how much she was paying her advisor, receiving different answers from the investment firm’s home office and the advisor himself.

However, the transparency I have brought to the table is only the first step. The second step is, is the fee my clients pay actually worth it?

There are four main areas to consider, as Michael Kitces of the Nerd’s Eye View blog, has researched so well. We will focus on Financial Gain, Risk Reduction, Well-Being Enhancement, and Behavioral Change.

These four areas cover the various ways a real financial planner helps his or her clients. This isn’t only about investment management, it’s about real life.

Special Note: Any Potential Economic Impact stated as a percentage refers to annual percentage of investable assets.

Financial Gain

When most clients think of financial gain, they think about beating the market with their investments. This isn’t it. Beating the market is a fool’s game and simply doesn’t work over long periods of time, which is why we believe in utilizing low-cost index funds to match market returns.

Instead, we can help clients achieve financial gain in various ways:

  • Income Tax Benefits

    • Claiming tax deductions, credits, tax-free investment opportunities

      • Potential Economic Impact - $1,000s to $10,000s

    • Tax deferred retirement contributions

      • Potential Economic Impact - $10,000s to $100,000s

    • Tax Bracket Arbitrage (Roth conversions & tax-sensitive liquidations)

      • Potential Economic Impact - 0-30% of Total Wealth

  • Investment Planning Benefits

    • Picking low-cost investments, Tax Loss Harvesting, and Asset Location

      • Potential Economic Impact - 0.65% - 2.17%

  • Estate Tax Benefits

    • Federal estate tax savings (for net worth >$5.5M)

      • Potential Economic Impact - Millions

    • Probate and settlement cost savings

      • Potential Economic Impact - $1,000s to $10,000s

  • Retirement Planning Benefits

    • Retirement portfolio tax strategies and withdrawal sourcing

      • Potential Economic Impact - 0.50% - 0.70%

    • Maximizing Social Security Benefits

      • Potential Economic Impact - $10,000s

    • Retirement-sensitive tax planning strategies

      • Potential Economic Impact - $1,000s to $100,000s

Risk Reduction

We don’t have any control over the direction of investment markets (and run away from anyone that says they do). Instead, we can control how we invest our dollars to maximize our desired returns while minimizing risk. Other areas of focus are making sure our family is taken care of if a catastrophic event, like disability or death, occurs.

  • Investment Planning Benefits

    • Rebalancing and Diversification

      • Potential Economic Impact - 0.35% - 0.44%

  • Insurance Planning Benefits

    • Optimizing Insurance Coverage

      • Potential Economic Impact - $100s to $1,000s

Well-Being Enhancement

Now to the fun part, living a great life. This, after all, is exactly what managing our finances properly is all about. Financial stress is far too common, which is why I really try to help my clients understand their finances so they are able to make confident decisions with true intent.

Here’s how we help enhance our client’s well-being:

  • Estate Tax Benefits

    • Ensuring assets go where they should and when

      • Potential Economic Impact - Priceless!

  • Retirement Planning Benefits

    • Determining when you can stop working

      • Potential Economic Impact - Priceless!

  • Insurance Planning Benefits

    • Eliminate Financial Catastrophes

      • Potential Economic Impact - Priceless!

  • Delegation Benefits

    • Spend money to free up time

      • Potential Economic Impact - Emotional Well-Being!

Behavioral Change

Let’s face it, we are all irrational people (myself included). We make most of our decisions based on our emotions and personal biases. This is why it is important to have a third-party that is unbiased to your life help you make these huge life altering decisions. Here’s how we help our clients manage their behavior with respect to their finances:

  • Investment Planning Benefits

  • Retirement Planning Benefits

    • Setting spending policies and budgeting

      • Potential Economic Impact - Making Retirement Work!

  • Delegation Benefits

    • Ensure things actually get done

      • Potential Economic Impact - Priceless!

  • Behavioral Benefits

    • Debiasing

      • Potential Economic Impact - Unquantifiable

    • Financial Coach for Implementation

      • Potential Economic Impact - Priceless!


Every individual has different needs and wishes when it comes to their finances. Before hiring a financial planner or investment manager, be sure to consider exactly what service you are looking for, and find a professional that can help you.


Source: Quantifying The Value Of Financial Planning Advice


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