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Financial Planning > Tax Planning

THE PLAYING FIELD- Serving the Not-So-Wealthy

By Staff Writer

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Ron Peremel has created a referral Web site that provides a smart way to remedy one of the industry’s conundrums: serving middle-market America. Peremel launched Myfinancialadvice.com last November, after years in the full-service and discount brokerage worlds taught him that middle-income America was in desperate need of professional financial advice. So Peremel built a Web site that allows this group of investors to pay for a licensed advisor’s wisdom by the hour.

Most advisors are busy chasing high-net-worth clients and shunning those who have “less than $100,000 in investable assets, and make less than $100,000 per year in income,” Peremel says. But Myfinancialadvice.com targets “the middle-income consumer who doesn’t get any advice, as well as the more sophisticated, higher-income individuals, those below the top 15% in wealth, who make up the mass affluent.” Both of these groups fall into the do-it-yourself investor category, he says, and are seeking professional help.

The site is also great for advisors who are looking to supplement their business with hourly clients. That probably doesn’t include the majority of advisors, but it is great for those who feel they have a duty to help the not-so-rich, and are “tech-savvy, and interested in utilizing the Internet to grow their business,” Peremel says.

Unlike other referral sites like WiserAdvisor.com, Myfinancialadvice.com is “an actual live advice site” that lets consumers buy advice on an as-needed basis, Peremel says. Say it’s midnight on April 14 and you have an urgent question about your tax return. By clicking the “taxes” section of Myfinancialadvice.com, you’ll be given a list of advisors in your local area that can help you with everything from tax preparation to tax form questions. And that’s not all. Advisors are also on hand to help with questions about financial planning, insurance, mortgages and lending, employee benefits, and investing. “The power [of the site] is that the client can choose different advisors for different needs,” Peremel says.

You’ve Been Featured

When you log on to the site, a “featured advisor” appears on the right-hand side of the home page. The featured advisor changes every time you enter the site. The advisor’s name, picture, biography, and area of expertise are shown. By clicking on the “view profile” button, you’re able to view all of the information in detail–including how much the advisor charges per hour or per minute. Prices range anywhere from $150 to $300 per hour. The “view profile” area also tells you whether the advisor is actually signed on and ready to accept questions via phone or e-mail.

The site uses “click-to-call technology,” Peremel says, so when you click the phone icon, the client’s and the advisor’s phones ring simultaneously. Using the “click-to-call” method ensures that “no one gives out their phone numbers, and we can then track the transaction once it’s completed,” Peremel says. If a client has a dial-up connection, she first has to log off of the Internet to free up the phone line, of course, or can enter a cell phone number that the advisor can call.

Before a transaction can be completed, the client has to accept the advisor’s proposal. Here’s how it works:

After the client has chosen an advisor, she must fill out online forms that ask for her personal background information–how much money she makes, her net worth, the type of advice that she needs, and so on. The forms are then transmitted to the advisor. “We have forms in all of the different categories of advice–insurance, capital analysis, asset allocation, and 401(k) plans,” Peremel says. Having the client fill out the forms online relieves the advisor from a lot of paperwork, he says. Myfinancialadvice offers “a streamlined process for communicating, delivering, and accessing the advisor,” he says, “and it makes it easier for the advisor and client to do business online.”

Once the advisor has the client’s completed forms, he then creates a proposal that lays out how he’ll help the client, how much it will cost, when the service will be delivered, etc. The client can accept the proposal, reject it, or revise it. If she accepts it, she hits the “accept” button, enters her credit card information, and the advice is delivered. Myfinancialadvice doesn’t “clear the funds until the advice is given,” Peremel says, and the advisor is paid on a monthly basis after the funds have cleared.

Peremel charges advisors a $300 set-up fee, which covers their Web training as well as an extensive background check of, among other things, any criminal and regulatory records. Peremel also levies a $150 annual renewal fee. In addition, Myfinancialadvice takes 35% of the advisor’s billing rate, which covers marketing and set-up costs. Along with three years of relevant work experience and a clean criminal and regulatory background, advisors must hold one of the following designations before they can become a member: CFP, ChFC, CFA, CPA, CPA/Personal Financial Specialist (PFS), Enrolled Agent, Series 7, or Mortgage Professional. And advisors must be independent, Peremel says.

Schmooze Marketing

Myfinancialadvice now features 65 advisors. Peremel has signed them up by visiting industry conferences and schmoozing with financial planning trade association officials. He says he prefers to work with fee-only advisors, because “it removes the conflict of interest.” Advisors can charge both commissions and fees, he says, but the services they provide through the Web site must be fee-only. “There are no products sold on the site, so it’s really fee for service.” Peremel says those advisors who are looking to transfer to a fee-only practice can use Myfinancialadvice as a testing ground. “Advisors can actually try the fee model just by trying out the site,” he says. Advisors “can see how it works servicing someone for a fee without having to transfer their business over” completely.

Sam Hull, a planner with Northstar Financial Planning in Bedford, New Hampshire, was one of the Web site’s earliest inductees. He joined the site because “the platform and idea are wonderful,” he says, and because it’s a great way to serve “that middle class that we’re always moaning about.” Hull charges $150 per hour for clients obtained through the Web site. He says that while his firm isn’t aggressively seeking small, hourly clients, he believed the extra money that he could get from hourly clients would help his dreams of lying on his yacht in the Caribbean come true a little bit faster. But he had more noble intentions for joining the site as well. His firm recently merged with another planning firm, and his new colleague is building her client list. “I thought this was a great way for her to get some cash flow,” Hull says. And Hull also wanted to fill in his spare time with activities other than golf. “This is a great way to help folks that really need it.”

Right now, “business is slow,” Hull says, because Myfinancialadvice is still trying to “get more eyeballs” to the site. Peremel admits that the member advisors are “waiting for volume,” but business will pick up, he says, once Myfinancialadvice solidifies distribution relationships with discount broker/dealers and financial planning trade groups. The distribution partners can promote Myfinancialadvice via their Web sites, through newsletters, and even statement stuffers, he says. Another boost will come from the company’s recently launched national consumer PR campaign.

Honing in on 401(k)s

Peremel expects the distribution channels and direct marketing campaigns combined to reach 20 to 30 million people. That’s just exposure, he says, and “then we have to convert them to actual customers,” which is taking, on average, two months per customer. “A lot of people are seeing [the site] as a new concept so they have to figure it out, and that takes time,” he says.

Myfinancialadvice’s goal is to have 2,500 advisors signed up within five years, “but we’ll grow beyond that” number, Peremel says. “Once we show that [the site is] very efficient and a great way to do business, I expect there will be more advisors who will want to take advantage of it.”

Peremel says that Myfinancialadvice is focusing a lot of attention on 401(k) plans “because that’s where we think the biggest need is.” He says 401(k) plan sponsors are intrigued with Myfinancialadvice because the site is able to deliver advice on a “mass scale.” Delivering advice on a mass scale “fits really well with the needs of the plan sponsors or employers who can’t give advice legally under ERISA rules, but they can give it under a third-party independent platform, so they can hire independent advisors or contract with them,” Peremel says. “Plan participants keep calling the sponsors looking for advice, so the sponsors are saying, ‘I need a solution to get advice not just to my executive-level employees, but to the rank-and- file employees as well.’ And that’s exactly what we do.”

He notes that Myfinancialadvice is compliant with ERISA rules as well as SEC investment advisor rules, and is “very deployable across all different levels of plan participants.”

Keeping Your Promises

While planner Hull concedes that Myfinancialadvice isn’t for every advisor, he thinks the site is a great way for planners who are just starting out “to get a book of business and build their skills in financial planning.” If you do join, Hull says, you’d better be able to do the work. Advisors “contract with Myfinancialadvice” to provide a service, he says. If an advisor gives a client a proposal for a certain number of hours, but can’t fulfill his obligation, he’ll “be chewing up hours and won’t be covered for it.”

It’s not every day that someone comes up with a plan to help the little guy. Peremel deserves kudos for figuring out how to harness Web technology to do just that.

Washington Bureau Chief Melanie Waddell can be reached at [email protected].

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