More Carriers Now Offering Fee-Based Financial Planning
At one time, agents who were new to the business were trained to tell new prospects, “There is no fee for my service, but if you decide to act on one of my ideas I would appreciate you do so with me.”
How times have changed. Those new agents of yesteryear have grown up to be fee-based financial planners, collecting both a fee for their advice and commissions through the sale of products.
“Charging fees is like charging for your wisdom,” explains Charles A. Brewster Jr., a planner from Osterville, Mass.
Brewster, a 24-year member of the Million Dollar Round Table, 10-time Court of the Table and 3-time Top of the Table qualifier, began charging fees 7 years ago, after 20 years in the business. “Because I charge a fee, Im getting paid for my time. Im able to completely eliminate any possibility of pressing someone into a product.
“Clients feel like they have a third party objective review,” Brewster explains. “All they care about is getting the right advice, and the right place to go for the right products, and theyll pay a fee for that.”
More and more carriers are implementing their own programs for field reps to charge fees for planning, and then follow up with providing commission-based products to fulfill the needs outlined in those plans.
Driving carriers to fee-based planning is what some company insiders feel is a shift in consumer behavior. Industry experts at some major carriers feel that consumers now want to pay for their financial planning advice. These carriers are giving their clients a choice on their relationship: fee-based advice, or strictly commissions from the sale of products.
“I believe many of the more affluent clients prefer a fee-based relationship. Its the way they work with their accountant and attorney, and the way they want to work with professionals,” says Jeff Harrison, assistant vice president for MONY Life, New York.
Consumers today want one person to pull their financial plan together, adds Donn Sharer, who is vice president of financial planning for MetLife Financial Services, New York. He notes that this is one of the reasons MetLife has entered the fee-based planning market.
“Consumers want it, they need it, its the direction the industry is going,” adds Bette Skandalis, vice president of financial planning for New England Financial, Boston, Mass.
“What consumers want is a trusted advisor, they dont want someone to sell them stuff,” says Skandalis.
There are two basic business models that carriers new to this market are following– one providing local expertise and the other centralizing these skills in the carriers home office.
New England Financial and MetLife Financial Services have entered the fee-based planning market, and while part of the same corporate family, they employ two very different models for their fee based business platform.
New England Financial began its pilot program in January 2002, by adding a planning specialist at an existing Advanced Marketing Firm agency. “The specialist is the person we pinpoint at the local level to build infrastructure, to have the technical skills to mobilize the people who need to be involved,” Skandalis explains.
Out of New Englands 83 Advanced Marketing Firms, 35 have now begun providing fee-based advice to their clients. Skandalis adds that each plan may cost anywhere from $500 to $30,000, depending on the complexity of the case.
MetLife uses a more centralized model. Expertise is found internally within their corporate home office where they have formed a “Case Consulting Unit.” This unit works with field reps in developing a comprehensive financial plan. Sharer describes the internal unit as “a dedicated team of financial planning specialists.”
“The Case Consulting Unit will do the underlying financial planning, and then theyll partner with the advanced markets group,” he says.
By paying a fee, Sharer says “people feel like theyre getting more objective advice, and they can implement the plan with whomever they want.”
Since MetLife has such a diverse client base, Sharer recognizes that not every client will need a fee-based plan, which is why his plans range in price from nothing for a very basic plan, to a few hundred dollars, to several thousand for more sophisticated plans.
“Theres a misperception out there that you need to be rich to take advantage of, or need, financial planning,” he says.
Other carriers in the fee-based planning market are MONY Life, Guardian Life, and Prudential Financial. While Guardian and Prudential have been up and running with fee-based planning for the last few years, MONY Life is just wrapping up a pilot program that has been in place since March. According to officials at MONY, they are about to open the program to all qualified participants in their field.