I keep seeing things that say we should charge “financial planning” fees over “investment advisory” fees. The most value comes from financial planning after all. Highlight the planning work, deemphasize investment management and clients won’t focus on performance.
I see some truth in the above description but if your client is obsessed with performance and doesn’t value your planning work, I suspect the culprit is neither the nature of the fee (AUM/Retainer/hourly/subscription/whatever) nor what you call the fee. It’s more about what you say and do.
If you are managing investments for clients or recommending some other party for the investment management, I think the client is perfectly reasonable in expecting a good result. But, if all you ever discuss is investment performance, that’s where clients will focus.
Longevity Versus Inactivity
Seems every safe withdrawal rate study is covering at least 30 years and most assume the same level of real spending throughout retirement. I’m not seeing that in real life. The few people that live into their 90s aren’t spending anywhere near what they once did because they simply aren’t as active.
Privacy Versus Engaging Clients’ Kids
I keep seeing articles that state as older clients die off, the assets will leave your practice when heirs inherit so, you must create a campaign to engage the heirs.
My first issue with this one is the implication that I should be concerned about an heir doing what they want with their inheritance. I work for my client and if my client wants Jr. to have free access to money, so be it. If Jr. is unlikely to make good decisions or faces other obstacles and it’s important to my client to arrange things to address the issues, that’s what I will do.
Many don’t want heirs in the loop. I have to respect that wish and especially their desire for privacy and confidentiality even if it means the heirs will not like it and not want to work with my firm as a byproduct of their anger.
Engagement with kids should be natural. not require a campaign. Living off a sum of assets can be complex. Add physical and cognitive decline and there are ample opportunities to be of value. That makes for a very good relationship with clients and their heirs to the extent clients want heirs involved.