President of Phoenixville-Based CCWMG Champions the Retainer Model as the Future of Financial Planning
In a recent column for Advisor Perspectives, Fred Hubler, the founder and president of Phoenixville-based Creative Capital Wealth Management Group, championed the retainer fee model as the perfect option to ensure that financial advisors and their clients are working toward a common goal with no conflict of interest.
Financial advisors often charge what is called an asset under management (AUM) fee for their services that allows them to charge their clients a percentage of the dollar amount they manage.
“This can be overly expensive and creates a potential for conflict of interest, as advisors are incented to mislead investors in order to make more money on managed assets,” wrote Hubler.
A common second way of charging clients is a commission fee. In this model, financial advisors will recommend investors buy certain investment instruments — insurance products, mutual funds, annuities, etc. — and then charge a percentage of commission.
“Advisors have a conflict of interest to encourage investors to make decisions that don’t meet their financial goals or ignore their risk tolerance when determining what investments are chosen,” Hubler wrote. “Instead, deceitful advisors will recommend financial instruments that will increase their commissions.”
A retainer model, however, is based on a fixed fee charged for all services. An investor pays that fee, and the advisor will provide sound, comprehensive, and uncompromised financial planning advice in return.
Hubler has developed a retainer-based financial plan customized for clients of Creative Capital Wealth Management Group.
“The retainer model offers a new way to invest money without having to overpay financial advisors,” he wrote. “This model is beneficial for both advisors and investors because it eliminates conflicts of interest and ensures security for all parties. Just because an advisor offers a retainer model does not make them inherently honest, but it removes the temptation of recommending advice based on personal gain.”
Read more about Fred Hubler and the retainer fee model from Advisor Perspectives.
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