Paying for Financial Advice on an A la Carte Basis
Sheryl Garrett, founder of Garrett Planning Network, discusses the fiduciary standard and questions to ask prospective advisors.
Smaller investors seeking financial advice often find themselves uncomfortably betwixt and between. They may not be able to meet the minimum asset levels that fee-only advisors employ; nor may their situations be complicated enough to warrant paying for advice on a percentage-of-assets basis. At the same time, they may not feel comfortable obtaining advice via a commission-based broker, particularly if he or she isn't required to adhere to a fiduciary standard.
One alternative business model for financial advice is the one employed at Garrett Planning Network, where clients pay for advice on an hourly, as-needed basis. Started by Sheryl Garrett in 2000, the network now has more than 300 member-advisors across the United States and overseas. I sat down with Garrett earlier this year to get her take on what to look for in a financial advisor, as well as her firm's business model and why she thinks it's so important that all advisors adhere to a fiduciary standard.
Let's start with the genesis of your firm. What prompted you to start Garrett Planning Network?
I started my financial-planning practice doing hourly as-needed, fee-only advice in 1998 after leaving a wealth-management partnership. My former firm was a comprehensive financial-planning firm, including portfolio management. We had one service, take it or leave it. My business partner and I found that we were attracting a lot of prospective clients but our model didn't really fit most of them. It was overkill, at a minimum. Sometimes it was grossly overkill.