Do you give away your financial planning process for free and rely solely on fees from assets under management to generate revenue? That’s a fundamental mistake, in the view John Girouard, president of Capital Asset Management Group in Washington, DC.

According to Girouard, this practice of giving away free financial plans just creates one more conflict of interest in the financial planning industry.  You invest hours of time and then you’re totally dependent on the “sale” at the end – which is getting the client to move their money to you.  Instead, Girouard says, it’s more straightforward to get paid for your financial planning time, which obviously is a valuable service and should be compensated, and let the client decide at that point to continue or not. “I find that if they don’t pay me for the advice that I give them, then they’re going to wonder how I am making my money,” he says.

Through his Institute of Financial Independence, he offers clients three programs: The Conditionomics Coach, the Integrated Independence Method™ and The Integrated Wealth Management Program.™  All three are increasingly involved – and increasingly expensive – financial planning programs.  His focus is on helping clients set goals, educating them on how the markets work, examining the investment products within their portfolios to see whether they can meet those goals – and letting professional money managers invest the money.

“Everybody goes through our Integrated Independence Method. They pay 50% of the fee up front, they go through a four-step process over four days. When it’s done, they pay the rest of the fee. If they want to implement the plan with us, then we’re paid on an ongoing basis to manage their money,” he says.
Other planners go right into the investment process, and then all of their perceived value to the client is rate of return. “Big banks can give away financial plans for free,” he observes. “But people will pay for unique experiences."

Focusing everything on gathering assets rather than planning, can bring out the worst in the profession, using the “free” planning time to intimidate clients into thinking that they’re not going to realize their dreams unless they save more, spend less and “give more money to us.” Instead, Girouard has been paid for his advice and if the client walks, he walks. “But 90% of the time, if they’ve spent that much time and effort going through our process together, then they’ll ask us to manage their portfolio.”