These are two separate issues. One issue is YOUR compensation and the other is the money manager's compensation. You can charge your clients a flat-fee for YOUR services and embedded within the investment management deliverable there could be basis points for expenses related to the services of the money management subject-matter expert, none of which are paid to you. These basis points for money management come out of your client's assets and are paid directly to the money management Subject Matter Expert. This is a perfectly acceptable way to operate until you find a money manager who is willing to manage the money for flat fee.
Your fiduciary responsibility, and one of the many reasons that you are so valuable to your clients, is that you accomplish appropriate money management for your clients in a very, very cost-effective manner. Almost certainly more cost-effectively than they are doing by themselves or is currently being done for them by a more traditional financial advisor or "wealth manager."
My understanding is that you can fairly easily accomplish high-quality asset management for 25 - 75 basis points.
You have the same goal of delivering high value in the most cost-efficient manner with every other element of comprehensive financial services: tax planning, financial planning, insurance, and legal. Some of these services might easily be included in YOUR fee and others may be paid by the client directly to the service-provider separately from what they pay you. An example of this is when a client refinances their home. The points and closing costs are not included in your fee, nor do you receive any payment from the mortgage provider, but you play an integral role in knowing high quality resources for mortgages, determining which loan is best, and accomplishing the refinancing in the most cost-effective manner.
Your primary goal is to deliver the Value-Based Financial Planning® Value Proposition:
1. Help your clients align their financial choices with their most important goals and most deeply held values.
2. Help your clients get their entire financial house in order and keep it that way forever.
3. Help your clients have a 10 level of confidence that no matter what happens in the markets, the economy, or the world that they will achieve their goals. THAT'S what YOUR fee is for.
