Building a fee-based independent practice

Building a fee-based independent practice

Building a fee-based independent practice

Commissions for wealth-management products are often derided in the media and may potentially face more stringent regulations. However, they remain the standard source of compensation in the industry.  Wealth Professional caught up with Thomas Venner, an advisor who is building a fee-based independent practice in Southern Ontario’s Golden Horseshoe region. He talks about the challenges and benefits of a fee-based practice.

When did you decide to become an advisor and what attracted you to the business?

I became an advisor six years ago. I began taking the CFP courses at a local college while I was still working in medical research, I have a masters in biochemistry. I had become self-directed investor in the late 90's and had done quite well during the recession in the early 2000's. When I came into a fairly substantial unexpected cash windfall I decided I should educate myself more fully in the area of financial planning and asset administration, thus the courses. When the employment situation deteriorated in the research field I opted to make a career change into something that I not only enjoyed, but was a necessity. 

Did you start as a commission-based advisor and switch to a fee-based model?

Yes, this is realistically the only way to make a living as a new advisor. Even now I have somewhat of a hybrid business model. I offer fee-only financial planning but also manage assets. The last six years have provided a rather difficult economic environment and have been very challenging with regards to building revenues and finding clients.

What are the particular challenges faced by fee-based planner?

I try to offer sound financial advice at a reasonable cost. I see many planning firms that charge over $2000 for a plan. I find the majority of people will balk at this expense unless they are high-net-worth clients. I'm aiming at the mid-market and provide segmented planning options in the $300-$500 range. This usually includes portfolio analysis, retirement income projections and risk management assessment. I have never had a client ask for a complete comprehensive plan, if I did I would probably charge a bit more. So generating income from fee-only planning is an issue.

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