The Kids are not alright: Fee-only planner and FP columnist on Findependence Day

This weekend’s Financial Post featured a column on financial literacy for young people and writer Jason Heath closed with a nod to Findependence Day. Titled The Kids are Not All Right, here is the full article and below is the reference to the book.

Jonathan Chevreau’s Findependence Day is another book that focuses on different stages of a young person’s financial development. While Taub’s book has chapters directed towards parents with children ranging from five to 21, Chevreau’s is aimed more specifically at young people aged 20-40. Findependence Day follows a young couple’s financial planning journey from their 20s to their 40s.

I should add that Jason is one of several fee-only financial planners with whom I vetted the manuscript when it was written in 2008. At the time, Jason was with one of Canada’s largest fee-only shops: EES Financial. The firm had created a concept it called Dream Day, which was very similar conceptually to what I call Findependence Day. Jason and a partner recently went out on their own to create their own fee-only financial planning shop, Objective Financial Partners Inc., based in Toronto.

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How fee-only financial planners can help take the emotion out of DIY investing

Unlike the United States, where fee-only financial planners are ubiquitous (See NAPFA’s site here), they are a rare breed in Canada.

In fact, according to one of them, Jason Heath of Markham-based EES Financial, there are only about 150 true fee-only financial planners in all of Canada. Compare that to 75,000 who sell financial products of some kind, or to the 25,000 who call themselves financial planners, or the 18,000 who are CFPs or Certified Financial Planners.

Jason was the second half of my presentation at the MoneyShow in September. As I noted in this blog then — here — I view fee-only financial planning as one of three key strategic components underlying what I call The Findependence Day Model: the other two being use of an online discount brokerage and making exchange-traded funds or ETFs the core of a portfolio.

How DIY investors can avoid doing it TO themselves

Earlier this week in my Wealthy Boomer blog — here — I described a TD Waterhouse survey on discount brokerage use and emotions. I noted that while DIY (Do It Yourself) investors may think they can go it alone, at least in bull markets, in these kinds of violently volatile markets, it’s as likely they will do it TO themselves. A fee-only or even fee-based advisor will likely more than pay for themselves just by acting as a sober second opinion and restraining the self-directed investor from succumbing to emotion-laden decisions at what may ultimately prove to be the worst possible time.

But fee-only planners do a lot more than just pick investment funds. Heath’s list includes tax planning and preparation, insurance needs analysis, estate planning and settlement, retirement planning  and negotiating or advocating on behalf of clients.

In short, fee-only planners can help reduce both investment costs and taxes.  As I argue in the other blog, no matter how knowledgeable a self-directed or DIY investor is, it’s extremely hard to overcome the emotions inherent in participating in today’s financial markets.

Fee-only is not an interchangeable term with fee-based

I think we’re in for several years of turbulent or sideways markets. If you can’t find a fee-only planner it shouldn’t be difficult to find at least a fee-based one. Remember, the latter charge a percentage of portfolio assets, typically between 0.75% and 1.5% a year. By contrast, a fee-only planner or advisor charges by the hour, monthly or year, or by the project: such as designing a financial plan or conducting a comprehensive portfolio analysis.

Scrutinize this web site as the months go by and you should be able to identify some of the country’s better fee-only planners with whom I’m familiar. Heath is certainly one of them. You may be able to find a video interview I conducted with him when we originally launched Findependence Day.

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