Choosing to work with a financial planner who offers a fixed-fee financial plan could help you manage your finances and focus on your goals. Read on to find out more about the benefits and why it could be the right option for you.
There are several ways financial planners might charge you for the service they provide. For example, some professionals may charge a percentage of the assets they’re managing on your behalf.
Alternatively, you could pay a fixed fee for the service provided. With this option, you’d pay a predetermined price for a specific service. For some people, this structure can offer clarity and predictability.
Read on to find out more about the benefits and why it could be the right option for you.
A fixed-fee financial plan could provide clarity for some investors
If you like to know exactly what you’ll be paying, a fixed fee could be right for you.
The cost of a fixed-fee financial plan is predictable. This might be important if you want to plan your outgoings or simply understand exactly how much the service costs.
With other options, you might need to calculate the fees based on the value of your assets. This means that the fees could change significantly. For example, following a period of market growth, the value of your assets could rise and lead to a higher fee.
A fixed fee can help you focus on your financial objectives
As the fee you pay your financial planner isn’t affected when the value of your assets grows, you might feel more confident that your planner is focused on your goals.
This might be important to you if you’re at a stage of your life when you’re depleting assets.
Let’s imagine you’ve just retired. You’ve spent decades accumulating wealth to fund this chapter of your life, and now it’s time to use it to provide an income. As a result, the value of your assets might decrease gradually throughout your retirement.
As you’re paying a fixed fee, the amount your financial planner receives will remain the same. For some, this could help you focus on financial planning, rather than managing your assets.
A fixed-fee option could make financial sense if your wealth is growing
As the fee you’ll pay will remain the same, a fixed-fee financial plan may be useful if you’re growing your wealth. This might be because you’re adding to your assets, such as paying into your pension each month. It could also be a good choice if the value of your assets is increasing, such as through investment returns.
With other fee models, the amount you pay for the service could increase as the value of your assets rises.
In contrast, with a fixed-fee model, the outgoings remain the same. As a result, you could benefit more from the value of your assets appreciating, and some might find that it’s an incentive to focus on growing their wealth.
It’s important to consider which fee structure is right for you
A fixed-fee option isn’t right for everyone, and it’s important to explore the alternatives to understand what’s right for you.
There are also drawbacks to consider. For example, if your circumstances become more complicated, the fixed fee may be reviewed to reflect the additional work. In that case, a different fee structure could be more cost-effective.
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If you’d like to find out more about how we could work together, as well as the cost of advice, please get in touch.
Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up, and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
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