‘I could have done without those 2 things.’ I used to like my adviser, but here’s what he did. Now I feel his 0.9% fee isn’t worth it and it’s a ‘little scary to leave him.’

Question: “I really liked my financial adviser, he was good, but after a few years managing both my mom’s and my money, I realized that it was just too expensive for the value received, even at a fee around 0.9%. He shared articles about how people with advisers do better, which I think is true if one panics when stocks go down and they sell everything or otherwise make emotional decisions. But that’s not me. I met with him about two times per year and he did quarterly rebalancing and had access to Dimensional Funds and did retirement projections. He also throws a party about once a year and makes a donation to my charity of choice. I could have done without those two things.

I am now buying portfolio and retirement software and going out on my own, although I’m also considering the Bogleheads Conference. It was a little scary to leave him and flat fee advising doesn’t appear to be a thing yet in the metro Washington, D.C. area. The only way we’ll get such is if we are willing to stop paying an unlimited AUM fee. Does flat-fee financial planning exist in D.C. and other major cities? If so, why’s it so hard to find?”

Answer: The good news is that flat-fee financial planning does exist in Washington, D.C. and other major cities. (Looking for a financial adviser too? You can use this free tool from our partner SmartAsset to get matched with a financial adviser, as well as sites like CFP Board and NAPFA.)

The caveat? “It remains far less common than the traditional assets under management (AUM) model. A growing number of advisers now offer subscription or retainer pricing,” says Ben Brown, a certified financial planner at Entelechy in Washington, D.C. Flat-fee advising costs vary but tend to run between $2,500 and $7,500 per project, while hourly advisers charge between $150 and $450 per hour for their services. Advisers who use a retainer or subscription model range from $150 per month to $800 per month for ongoing advice.

Have an issue with your financial planner or looking for a new one? Email questions or concerns to picks@marketwatch.com.

One reason the AUM model dominates is because it automatically scales with a client’s portfolio. “Flat-fee firms often operate with thinner margins. Still, I believe the flat-fee approach is often more equitable for clients and helps reduce conflicts of interest,” says Brown. Flat-fee, fee-only fiduciary advisers are required to put their clients’ best interests ahead of their own, meaning they’re only compensated by the client and don’t earn commissions for the sale or recommendation of a financial product. This helps ensure that clients are truly paying for advice that benefits them and nobody else.

Another reason it’s hard to find flat-fee planners is that it can be difficult for the economics to make sense for the financial planner. “Financial planners spend a lot of time meeting with clients, gathering information and analyzing the information. Customers may not be able to pay the flat fee, so the AUM model makes paying for services manageable,” says Mark Humphries, a certified financial planner at Sentinel Financial Planning in Annapolis, Md.

To find a flat-fee adviser in your area, you may need to change where you look. “Large financial and insurance companies have an endless amount of resources to advertise their products and services. This makes it difficult for smaller firms to get noticed. You’re more likely to find flat-fee planning at a smaller firm, though flat-fee financial planning does not mean lower cost,” says Humphries.

Working with a flat-fee planner means they’ll charge you based on the complexity of your financial picture, not the size of your portfolio, says certified financial planner Filip Telibasa at Benzina Wealth. “Don’t assume fiduciary always equals unbiased. It’s a legal standard, but compensation structure still shapes behavior,” says Telibasa. 

For that reason, you’ll likely want to work with a fee-only, flat-fee adviser like a CFP who has completed extensive education requirements, passed exams, performed thousands of hours of work-related experience and adheres to a fiduciary duty at all times. This will ensure that they’re putting your best interests ahead of their own, and if they use the fee-only model, that means they’re only being paid by the client and not receiving compensation from a third party.

Indeed, the costs associated with flat-fee planning vary depending on the scope of work. “At my firm, I have a subscription fee that costs $395 for the first month and $175 per month after that. The first month is onboarding and includes two meetings. Subsequent months are for one meeting per month and you can start and stop when you want. My fee model is called advice-only which means I do not seek to manage your assets or sell you products. My only goal is to provide advice that maximizes your wealth building,” says certified financial planner Mary Ann Sullivan at 395 Financial Planning.

To find a flat-fee planner, start your search using XY Planning Network. “Many of the advisers listed in XYPN’s find-an-adviser search tool are flat-fee and also AUM. There are other organizations who have similar search tools like the CFP Board and the National Association of Personal Financial Advisors (NAPFA),” says Humphries. You can also use this free tool from our partner SmartAsset to get matched with a financial adviser.

If you feel confident handling your own investments and financial decisions and you have the time to do so, DIY-ing your finances is certainly a viable option. As for attending the Bogleheads Conference, you may find some of the seminars to be enlightening and helpful as you move forward in being your own financial adviser, but keep in mind that there’s a cost to attend the event. All in, including the entrance fee, travel and hotel, you’re probably looking at a minimum of $1,500 over the course of three days.

Like with any specialty, working with a professional can often be beneficial. “While you seem to have an understanding of your finances, a professional can provide immense value with holistic planning, estate planning and tax optimization. They may suggest things you didn’t think about because you don’t know what you don’t know,” says certified financial planner Mark Struthers at Sona Wealth Advisors.

Have an issue with your financial planner or looking for a new one? Email questions or concerns to picks@marketwatch.com.

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