What is Fee-Only Financial Planning?

In this clip from our latest podcast with Shannon Lee Simmons, she explains the fee-only financial planning model and why it’s becoming more mainstream in Canada.

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So talk to us a little bit about the fee model. The fee only model, because most Canadians aren’t very familiar with that model.

I know, it is changing. I do find now when I used to, like 15 years ago, if I told someone I was a fee only financial planner. Their, just, their eyes would just glaze over and they’d be like, what are you talking about? Um, and it felt very niche, like someone found out about it and they were these hyper-focused personal finance nerds who would find us.

That’s in the, in the beginning and now I do feel like it’s becoming more mainstream, and that’s because of financial educators and, and podcasts like yours. Also, I feel like the media, you know, has been talking about fee only and for anyone also listening, sometimes it’s called advice only, and they’re the very same thing in my mind, and so that what that means is.

We are 100% unbiased in our advice. And so you pay a fee only for our time or for the advice only. And that to me means when you’re unbiased and you’re holistic in your financial planning. So if someone comes and says, should I pay off my mortgage? Or put a big chunk on it, or should I invest it? And we crunch all the numbers.

I don’t, you know, we don’t make more or less money off of you depending on what that decision is. And so for me, that was always something that really frustrated me when I was giving advice, when I did have assets under management. And that’s not to say that if you have that bias, you’re getting bad advice.

There’s lots and lots of places where the two of them live beautifully together. Just for me, and so that’s what the fee only or advice only space is. Is that unbiased, completely. You’re paying for time and usually paying on a sort of set fee for a project.

Right, and, and again, in Canada a lot of people tend to default to thinking of advice as investment advice, but this is a much more holistic approach where you’re helping them to develop the portfolio approach, but also tax planning, estate planning, insurance needs analysis, the whole shebang.