Skip to Content
Advisor Insights

Adding Project-Based Planning to Your Advisory Business

This useful addition to a practice can broaden the reach of advice.

Get Morningstar's essential reading for financial professionals in Advisor Digest.

The landscape of the financial advice industry continues to evolve. As more clients seek financial planning over investment management services, advisors must adjust their fees and offerings to keep up.

Traditionally, most fee-only and fee-based advisors charged clients based on assets under management. But to serve the mass affluent or early wealth accumulators, advisors are experimenting with alternative fee models, such as flat fees, hourly fees, and subscription or retainer fees.

One newer model that many traditional fee-only planners might not be familiar with is project-based financial planning. It's a useful addition to a practice that can help broaden your reach.

Groups like the Alliance of Comprehensive Planners and the XY Planning Network have made the ongoing fee-for-service financial planning model a popular option. While there are many benefits to a retainer model, it also has its downfalls, such as:

  • Lower client retention: When working with clients who have more income than assets, a flat fee that is paid out of cash flow is a harder sell than an AUM fee that is pulled directly from a client's investment account or a commission-based fee that is baked into the cost of the product being sold. Since the fee is more salient with retainer models, client retention rates tend to be lower.
  • Profitability: For the ongoing fee-for-service model to be profitable, advisors must charge enough to account for the time involved in providing the service. Depending on how fees are calculated, they may not automatically increase over time like AUM fees. In addition to pricing for profitability, there must also be a process to adjust fees regularly.
  • A limited client base: It is much easier to retain fee-for-service clients when the fee is a small percentage of their income. The higher a client's income, the easier it is to absorb the ongoing fee. Also, clients with more complexity or dynamic situations value ongoing fee-for-service financial planning over clients who are early in the accumulation phase or have very few changes year to year. Advisors who moved to a retainer model to provide services to early wealth accumulators could eventually "move upstream" to clients in the top percentile of income earners.

For advisors interested in expanding their services to underserved markets (particularly prospective clients who do not have enough assets to meet the minimums of traditional AUM business models or enough income to justify an ongoing financial planning fee), that's where project-based financial planning comes in.

Three Methods for Providing Project-Based Financial Planning Services

While there are many ways to provide project-based financial planning services, I've found three methods that work well among peers. The following can be customized in a number of ways, but here are simple outlines of the three:

  1. A one-time financial plan: A service that offers a one-time comprehensive financial plan. The engagement starts when the advisor requests documents and information from the client in advance of a discovery meeting (or two if needed). After the discovery meeting, the advisor develops the financial plan and a list of recommendations for the client. The advisor presents the plan in a final meeting with the client. Many advisors offer a limited support window (typically one month) to answer questions related to the financial plan.
  2. A limited-term engagement: A great service for clients who need a little more hand-holding beyond the one-time financial plan service but aren't ready for the long-term commitment that comes with an ongoing planning relationship. With this service, the advisor can offer ongoing services for a limited term (typically three months). During this time, the advisor can provide a one-time plan and offer additional meetings or phone calls to assist with plan implementation.
  3. Ask me anything: A single meeting in which the advisor meets with a client for a specific period of time (typically one to two hours) and answers the client's questions on the spot. The advisor may require the client to complete a brief questionnaire to get a sense of the client's situation and the purpose of the call. Other than a quick overview of the completed questionnaire, there is typically no preparation for the meeting. Some advisors will have clients note their own action items throughout the meeting, so there is no follow up. Other advisors will take notes during the meeting and send a quick recap of the conversation to the client shortly after the meeting. This service is a great alternative to hourly financial planning, and it protects your time as the advisor.

Who Is a Good Candidate for Project-Based Financial Planning?

This service works well with early accumulators who have fairly simple finances and are not in a life stage where ongoing planning is valued or necessary. For example, a young professional who is a W-2 wage earner and single with no children could benefit from this kind of financial guidance. Ongoing services could be overkill, but a short-term engagement or a check-in every few years is sufficient. Project-based financial planning services also work well for do-it-yourselfers who are financially savvy but value periodic check-ins from a professional to ensure they are on the right track.

Advisors who provide these services must also consider the personalities and behaviors of prospective clients. Project-based financial planning is most effective with clients who have a history of good financial habits. The ideal clients are comfortable with following recommendations and do not need ongoing accountability or support. Clients who would be better served with ongoing financial planning may opt into project-based financial planning because of the lower price. It is important to identify the appropriate candidates for this service so you can feel confident that the relationship is mutually beneficial.

Other Considerations

Pricing: The fee for these services must be attractive to the client (in terms of affordability and value) and profitable for the advisor. When determining the fee structure, consider your target client, the time involved in providing the service, and the value of the service to the client.

Business goals: You should also consider how these services fit in with other services your firm offers. Advisors who focus primarily on offering ongoing financial planning services may want to charge a premium for one-time plans, as the work can be accelerated into a condensed time frame. If you desire to have most of your revenue come from ongoing services, consider how many project-based clients you take on at once and how much time you would like to allocate to each service offering. If most of your revenue comes from project-based services, you will have to market to new clients to earn consistent revenue.

Client access: When delivering services, consider how much access you want to give project-based clients to your software or other services. For example, do you want them to have the same access to your financial planning software or other systems that ongoing clients have? Are you comfortable providing investment management services for these clients, or do you only offer this service for ongoing clients?

Communication: As we all know, but sometimes forget, communication is key. When offering project-based financial planning services, it is imperative that you set expectations with the client. For the best experience, clearly communicate the time frame of the engagement to your client and what you require from them. You should also communicate the number of meetings, expected deliverables, and guidelines for support windows or follow-up actions.

Project-based financial planning services provide an opportunity for advisors to expand their services to clients who may not otherwise qualify to work with an advisor under the more traditional service models. There are countless ways to provide a service that is meaningful to the client and profitable to the advisor. Careful planning around your target market, services provided, pricing, and execution can lead to a successful, sustainable business model.

Chloé Moore, CFP, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta that serves clients nationwide. Her firm is dedicated to serving tech employees who are entrepreneurial-minded, philanthropic, and purpose-driven. Moore believes money is an emotional topic that impacts many aspects of our lives. She enjoys helping clients unpack their money history and discover how they can use money to support a life that is most meaningful to them. Follow Moore on Twitter: @finstaples. The views expressed in this article do not necessarily reflect the views of Morningstar.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.