Home > Marketing, The Business Plan > How About a Free Financial Plan?

How About a Free Financial Plan?

You may have already read about my beliefs on free financial plans on my other blog. Now I am going to make an argument against that post.

Yesterday, financial planner Rick Kahler, CFP® posted a great piece titled “Study A “Test Drive” For Financial Planning” on his blog which does a wonderful job quantifying the benefits of financial planning. I applaud him for this “test drive” concept, but I think it’s time to challenge the financial planning profession to take that a step further and offer a true test drive.

I believe it is time for those of us who provide true financial planning – meaning planning focusing on a client’s overall financial well-being, not just investments – to offer a true test drive. It’s time we teach the public the true value of financial planning so they can learn for themselves why it has so much power and why investment management is not the true value financial professionals deliver.

What I propose is to take prospective clients through the financial planning process for free! Agree on a fee in advance, but allow these prospects to decide if they believe there is value in the financial planning process after they have had the opportunity to see for themselves. If you are delivering a valuable financial planning service focused on a strong promise and deep relationship with clients, I suspect many prospects will understand the value and agree to continue the relationship in a for-fee arrangement.

We can begin teaching more people about the benefits and power of financial planning if we show more people why it is so powerful. Removing cost commitment up front will allow us to reach more people. Sure you’ll be taken advantage of by some people, but even in these people you may build goodwill and good word-of-mouth if the situation is handled respectfully.

So let’s really start showing the public the value of financial planning. Give them a taste of financial planning for free. Consider it a contribution to the profession and as a marketing cost, if that makes the loss experience more palatable. This is what I plan to do as soon as I begin engaging with clients again.

  1. June 22, 2010 at 8:15 am

    While I completely agree with the spirit of the idea, I think you’re possibly wading into dangerous territory with this.

    Part of the problem with our industry and the widespread misunderstanding of what we do and how we add value is the fact that we’re not perceived as a true “profession”.

    Think about how many doctors, attorneys or other professional service providers would be willing to invest their time, energy and expertise without agreeing to be compensated up-front or along the way.

    I agree that there is a HUGE gap in the public understanding of what we do and how we can have a tremendous, positive impact on our clients’ lives, but I think there might be other avenues to consider to educate consumers about how we can help them help themselves.

    Just my 2 cents 🙂

    • June 22, 2010 at 8:25 am

      Russ, I agree with your thoughts in many ways and for a very long time believed we needed to be compensated for our time no differently than doctors or attorneys.

      However, the fact is we are not a true profession…and we are a long way from becoming one. We do not have a common body of knowledge which is expanded with each passing generation of professionals, we do not have a true career track, and we are not serving in the public’s interest currently.

      We can make this a true profession, but I think it requires those of use who are actually committed to that goal to educate the public about the profession and to work with one another to create the necessary components of a profession. We are the formative generations of this profession and we likely have to give some of ourselves and our financial well-being to bring a true profession into existence.

      The question each of us has to ask is, do we value the creation of that profession enough to make a few sacrifices for it. I submit the idea I have outlined above is one of those sacrifices we must make.

      • June 22, 2010 at 9:02 am

        I disagree, but not entirely.

        I think value should be exchanged for value. In my business, my expertise is exchanged for my clients’ well-spent money.

        I don’t believe our full expertise should be given away in the hopes that people will recognize this value and compensate us on the back-end.

        There are plenty of ways we can give away value and educate people without giving away our own body of knowledge.

        We can do pro bono work. We can offer free educational workshops. We can blog, just like you do here and on your other site.

        And I think the better answer to your proposal above is to offer a paid-for “test drive” of our services and our value.

        Let’s say you offer a full financial plan for $1,000 or $2,000 or $5,000 (the price doesn’t matter). Why not offer a piece of your plan for 20% of that price?

        How about a stand alone retirement analysis for a couple hundred dollars? Then, if people see the value in what you offer, they can apply their $200 fee to the cost of a full plan. And if they don’t want to, you’ve still helped them, and gotten paid a fee for your time and expertise.

        This is as much a philosophical discussion as it is a business discussion, but I don’t believe in giving away all my expertise for free, ever.

        Great discussion topic. Thanks.

  2. June 22, 2010 at 8:56 am

    I have to agree with Russ on this one. As tempting as it may be, it has the potential to significantly decrease the perceived value of what we do.

    As you point out though, we are a profession that does not draw a distinction between the various participants so expecting a client to understand that is asking a bit much.

    I’m not here with a solution. I just think we need to be careful and examine how what we do in the short-term can negatively impact the long-term.

    • June 22, 2010 at 9:05 am

      Chris, I am really going to step out on a limb in response to you. Again, I have long felt the way you do, but…what perceived value??? The vast majority of the public has no concept about what financial planning is, much less the value of it. Many “financial planners” in fact only give financial planning lip service and really believe in investment management.

      I think we first need to build a recognition of the “life” value financial planning can have, then we can begin to put an economic value on that.

  3. June 22, 2010 at 9:09 am

    Another thought . . . in my opinion, the true value of planning is the ongoing coaching and adjustments that need to be made to accommodate for changes in the client’s life and/or changes in the economy, etc. It’s not plan itself.

    Based on the way I deliver planning and advice, it often takes my clients 2-3 quarters before they really begin to “get it” and understand how one financial decision can impact multiple areas in their lives and goals – both near-term and long-term. Oh sure, I deliver a ton of value up-front and my clients recognize and appreciate this, but I’m not sure it really “clicks” for many of them until we’ve been working together for several months.

    This is another reason why I’m not comfortable with counting on consumers to appreciate all the value we deliver up-front during the plan creation phase.

    • June 22, 2010 at 9:19 am

      YES…but this is just it! You are not giving up much of your expertise and value on the front end by doing this, but you are giving that “flavor” that will help people understand why it is important! You will have engaged a client and shown them what you can offer.

      Then you are asking them to pay for the real value, the ongoing service, coaching and advice, the true deliverable. That initial financial plan is not what people are paying for, anyway.

      You give up a bit of time and potential money, but my belief is the number of prospects who become clients will be greatly increased in this manner meaning less prospecting is necessary. And you are doing the budding profession a service by increasing understanding of the profession.

      • June 22, 2010 at 9:28 am

        Actually, for me to perform client discovery, gather and confirm client data, create and present a plan along with action steps, I’ve invested a lot of time and expertise long before the ongoing coaching and advice begins. For me, at least, this isn’t a “bit of time and potential money”.

        In the past, I’ve done all this for a single fee based on a client’s portfolio, but I’m currently reviewing my business model and client offerings to better align my compensation and the value I deliver.

        I think this will allow me to better run my firm like a business, create a better and more consistent client experience and deliver even more value and better meet expectations than I have in the past.

        I’m not finished with this process and haven’t made any final decisions, but I feel very good about the direction I’m heading and know that it will benefit my clients and me.

  4. June 22, 2010 at 9:31 am

    Oh, and another very valuable piece of the up-front plan creation process . . . I get to evaluate the client to determine if it’s someone I even want to work with on an ongoing basis. This isn’t always the case. And I’m not willing to do a plan up-front for free at the risk that neither I nor the client want to work with each other further.

    Sorry, I’ll quit rambling now 🙂

  5. June 22, 2010 at 9:51 am


    You raise an interesting point and idea here in this post. After reading the exchange between you and Russ I would say that I am going to take Russ’s position. It is our job as professionals (note I am not a financial advisor but a wealth coach who works with financial advisors and their clients)to clearly communicate our value proposition in a way where our clients can hear it and understand it. Instead of giving more away for free, maybe more financial planners need to become more adapted at truly listening to their clients needs and wants and then make a value proposition based on this information.

    I also think that as a society each individual needs to step up and take more personal responsibility to become financially literate. You do not need to become an expert but you do need to be knowledgeable enough to see the importance of a financial plan. This starts by educating the public, educating our children in school and in our homes and learning from our past mistakes in not giving our financial lives the “investment” they deserve.

    Why is it we do not hesitate to pay the plumber for his or her services, but we are so relunctant to pay for a financial planner’s expertise? I really think our country including clients as well as financial planners need to experience a mindshift. My experience has been when you give your expertise away for free (other than blogs, articles, etc which are part of rountinue marketing) you are doing a disservice to the profession. People really do get what they pay for and maybe building on the idea of project basis work and a lower entry fee is the way to go versus the “pay me if you are satisfied” strategy.


  6. June 22, 2010 at 10:30 am

    One other issue that I just thought of is would these plans be done with “clients”, meaning are they true engagements? Would advice be given? Or would it be done very generically?

    The firm accepts legal liability for planning clients that have engaged the firm. Just a thought….

  7. June 22, 2010 at 11:20 am

    I’m glad you asked that question, Chris. Part of my concept that I did not spell out on the blog post was that an actual financial planning engagement including fee would be signed by client and planner on the front end; but the client (and maybe the planner also) would be given the ability to opt out of the contract at the time of initial plan delivery. The default nudge is to continue with the service. In fact, thinking about it more, calling the plan “free” is actually a bit of a misnomer.

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