By: Jacob Wade | Edited By: Brian Thorp
What this article covers
Most people assume financial advisors charge 1% of the assets they manage — and many do. But that’s just one of the eight most popular ways advisors can be compensated, and for many clients it’s not the most cost-effective option. This guide explains every major financial advisor fee structure in plain terms: what you pay, what you get, who it’s best for, and what actual advisors say about when each model makes sense. Whether you’re comparing advisors for the first time or wondering if you’re overpaying an existing one, this is the starting point.
Hiring a financial advisor can be a great move to help you achieve your financial goals and establish an investing strategy based on your individual needs and circumstances. Advisors can work with you to develop a personalized financial plan and build an investment portfolio to meet your longer-term goals, as well as help you plan appropriately to enjoy a comfortable retirement.
But how much does a financial advisor cost, and how can you ensure that you’re not paying too much?
Over the years, financial advisor fees have evolved as the industry has moved to a more transparent pricing structure. However, there is still considerable confusion about how financial advisors make money and what a reasonable amount to pay is.
We’ve prepared this guide to explain how financial advisors make money so you can make an informed decision about who to hire and how to pay for their services.
Key Takeaways – How Much Does a Financial Advisor Cost?
Most financial advisors charge around 1% of assets annually, but that’s just one of eight fee models.
The AUM (assets under management) model remains the most common way advisors are compensated, but it’s far from the only option. Financial advisors today also charge flat fees, hourly rates, one-time fees, subscription fees, income-based fees, and commissions — giving you meaningful choices about how you pay.
Alternative fee structures can save high-net-worth clients thousands of dollars per year compared to AUM pricing.
As your portfolio grows, the dollar cost of a 1% AUM fee rises even if the work your advisor does for you stays the same. Flat fee and advice-only advisors offer comparable services at a predictable, often lower cost — a distinction that can significantly improve your long-term investment outcomes.
Understanding how a financial advisor gets paid is just as important as knowing what you’ll pay.
Compensation models shape advisor incentives — commission-based advisors, for example, may have conflicts of interest that fee-only advisors do not. Before hiring, ask advisors to disclose all the ways they’re compensated, verify their credentials through the SEC’s IAPD database, and interview multiple candidates to find the best fit for your needs and budget.
Table of Contents
- What Services Do Financial Advisors Provide?
- The Eight Ways Financial Advisors Charge for Their Services
- Quick Reference: Eight Financial Advisor Compensation Models Compared
- 1. Financial Advisors Who Charge a Percentage of Assets Under Management (AUM)
- 2. Flat Fee Financial Advisors
- 3. Hourly Fee Financial Advisors (with Retainer)
- 4. Financial Advisors who Charge a One-Time Fee (Modular Pricing)
- 5. Advice-Only Financial Advisors
- 6. Financial Advisors who Charge Subscription-Based Fees (Annual or Monthly)
- 7. Financial Advisors who Charge Based on a Percentage of Your Income
- 8. Commission-Based Financial Advisors
- How to Choose a Financial Advisor
- Find Your Next Financial Advisor on Wealthtender
- FAQs: Financial Advisor Costs
Before we talk about how you can pay for a financial advisor, let’s review what an advisor can do for you and why hiring one can be a worthwhile investment.
What Services Do Financial Advisors Provide?
Though many people use a financial planner simply to invest for retirement, this is only a small part of what many advisors offer. Here’s a quick rundown of possible services a financial advisor may offer you:
- Budgeting and money management
- Funding college and higher education
- Debt management
- Insurance planning
- Retirement planning
- Investment planning
- Inheritance planning
- Estate planning
- Tax planning
As you can see, financial advisors can help with your entire financial picture, not just investing. As you start to plan for life’s bigger milestones, you should consider finding a financial advisor who specializes in the areas most important to you.
By finding the right financial advisor, you’re more likely to minimize risk, maximize gains, and take advantage of tax breaks while investing in your future. They can also help you protect your assets with the right kinds of insurance and pass on your financial legacy with a proper estate plan.
Now that we know a financial advisor can help you build a plan for your entire financial life, let’s talk about how much you can expect to pay to work with a financial advisor.
The Eight Ways Financial Advisors Charge for Their Services
The cost of hiring a financial advisor can vary significantly based on the services provided. Paying a 1% fee on your assets managed by a financial advisor is quite common, but there are at least eight ways financial advisors are compensated by clients, each with varying costs:
- Percentage of Assets Under Management (AUM)
- Flat Fee
- Hourly Fee
- One-Time Fee (Modular Pricing)
- Advice-Only
- Subscription-Based
- Percentage of Your Income
- Commissions
Before we review each compensation model in greater detail to explain the costs you can expect to pay a financial advisor for their services, you may find the table just below useful for quick reference.
Quick Reference: Eight Financial Advisor Compensation Models Compared
Summary of Eight Financial Advisor Compensation Models
Use this quick reference to compare how financial advisors can be compensated, what you can expect to pay, and which model may be the best fit for your situation.
| Compensation Model | Description | Typical Cost | Best For |
|---|---|---|---|
| 1Percentage of Assets (AUM) | Advisor charges an annual fee based on a percentage of the assets they manage for you. | ~1% annually; discounts common above $500K–$1M | Those seeking comprehensive investment management and full-service financial planning. |
| 2Flat Fee | Advisor charges a fixed annual fee for specific services, regardless of assets managed. | $1,000–$10,000+ per year depending on scope and complexity | Clients with larger asset balances who want predictable, transparent costs. |
| 3Hourly Fee | Advisor bills by the hour for services rendered, often with an upfront retainer block. | $150–$400+ per hour | Those who need specific advice or a financial plan without ongoing asset management. |
| 4One-Time Fee (Modular) | Advisor charges a one-time fee for a specific service or focused financial plan. | Typically starting at $500; varies by service | Clients needing help with a particular financial issue without a comprehensive plan. |
| 5Advice-Only | Advisor provides guidance without managing investments; client implements recommendations independently. | Often hourly or flat fee; typically lower than full-service | DIY investors who want professional guidance without delegating asset management. |
| 6Subscription-Based | Clients pay a recurring monthly or annual fee for ongoing access to advisory services. | ~$50–$500+/month depending on service tier | Those with limited investable assets who still want ongoing advisor access and support. |
| 7Percentage of Income | Advisor’s fee is based on a percentage of the client’s annual income rather than assets. | ~1% of annual income (e.g., $1,500/yr on $150K income) | Higher earners early in their financial journey who don’t yet meet typical AUM minimums. |
| 8Commission-Based | Advisor earns commissions from selling financial products such as mutual funds or insurance. | Costs embedded in product fees; varies by product (e.g., front-load fees up to 5.5%) | Clients who prefer not to pay direct fees and are comfortable with transaction-based compensation. |
1. Financial Advisors Who Charge a Percentage of Assets Under Management (AUM)
While paying an advisor a fee based on a percentage of the assets they manage for you remains the most common compensation method, alternative compensation models are growing rapidly, as we discuss later in this article.
Paying an advisor a percentage fee is called the “assets under management “ or “AUM” fee model. The current industry standard is to charge anywhere from 0.50% – 2% of the assets being managed on an annual basis. Most advisors will fall somewhere around the 1% fee mark and will often charge a discounted rate above certain tiers or asset thresholds.
This means if you deposit $500,000 with a financial advisor at a 1% fee, they will charge you $5,000 annually to handle your investments. Or, if they charge 1% on the first $250,000 of your assets they manage and .75% for assets above $250,000, your annual cost for a $500,000 portfolio would be $4,375 ($2,500 + $1,875).
While the price you pay to a financial advisor under the AUM fee model is calculated based on the assets they manage for you, you will likely receive additional services, such as the development of a financial plan, for no additional cost. This fee pays the advisor to invest your money for you based on your risk tolerance, goals, timelines, and other factors of your financial plan.
Finding a full-service advisor who will manage your funds for 1% or less is generally considered attractive, while paying significantly more may cost you a large portion of your potential returns over time.
As your assets managed by an AUM advisor grow, you should also expect the percentage fee you pay to decline. For example, many advisors will lower their charge below 1% once the assets they manage for you exceed a certain threshold, e.g., $500,000 or $1 million.
You should be aware that under the AUM model, an advisor could earn considerably more when the stock market performs well, even if they haven’t done any additional work for you. Of course, the opposite is also true. When the stock market declines, an advisor may earn considerably less while still providing you with all of the services you should expect from them, no matter the market conditions.
Best For – If you want an advisor who provides financial planning and investment management services for around 1% of the assets they manage for you, finding a good fee-only advisor who charges based on AUM may be a good fit. As your assets grow, you should ask your advisor if they can offer tiered pricing so you will pay a lower percentage above an agreed-upon threshold.
2. Flat Fee Financial Advisors
A growing number of financial advisors offer services for a flat fee as an alternative to traditional pricing models (e.g., charging you 1% of the value of your portfolio managed by the advisor). Especially as your net worth grows, you may find a flat fee compensation arrangement can save you thousands of dollars each year vs. an advisor who is paid a percentage of the assets they manage for you. And, of course, the less money that goes to your financial advisor means more money available for you to enjoy in retirement.
If you’re thinking about hiring a flat fee financial advisor, it’s important to look under the hood to understand what services are offered and how the fee is calculated. For example, a flat fee charged by some financial advisors may include developing a financial plan for you but not investing your money on your behalf. Other flat fee financial advisors might include investment advisory services.
And just because a financial advisor charges a flat fee doesn’t mean every client will pay the same rate. In many instances, the flat fee might be calculated based on your income, portfolio size, and/or the overall complexity of your individual circumstances.
Flat fee financial advisors will typically outline exactly what is included in this planning service, with different tiers for more comprehensive planning. For example, the flat fee may include creating a detailed financial plan for your debt, goals, investments, and more. Be sure to ask the financial advisor upfront if they will implement the plan for your investments on your behalf or if they will leave it up to you to follow the details of the plan.
In certain instances, you may only require a flat-fee financial advisor’s work one time (in which case, you may want to consider an hourly financial advisor, though the same financial advisor may offer both pricing models and should steer you to the pricing model likely best for your individual needs).
Clients of flat fee financial advisors often work together for many years where the flat fee is often billed quarterly. The cost of hiring a flat fee financial advisor can vary significantly from $1,000 to $10,000 per year (or more), depending on the scope and detail of the financial plan provided, whether or not investment management is involved, and the complexity of your circumstances.
Best For – If you plan to establish a longer-term relationship with a financial advisor who charges you a fixed cost each year, a flat fee financial advisor may be an ideal solution for you. This is especially true for affluent clients with larger asset balances above $1 million who are seeking ongoing investment management and planning in retirement.
ASK THE EXPERTS
We asked flat fee financial advisors to offer their perspectives on when and why people may want to hire a financial advisor who charges a flat fee. Here’s what they said.
For affluent investors, your advisor fee can “make or break” your retirement income plan as a 1% fee charged on your investments can devour over 30% of your after tax investment income each year in retirement.
Now, thanks to advancing financial technology, a low fixed fee is rapidly replacing the 30-year-old legacy percentage on asset (AUM) advisor fee and can transform your “income outcome” in retirement.
Today’s low fixed fee offers clients greater transparency and control over their annual fee and, unlike legacy percentage on asset fees, fixed fees do not rise each time the market goes up or when you add to your investment account.
Don Rudolph | FLAT FEE CIO
While no type of fee model is perfect, the flat fee model is one of the most transparent and fair advisor-client compensation methods. It helps to remove the conflict of interest of “looking to gather your assets,” as well as a variety of conflicts around paying down debt vs. investing. With a flat fee model, you always know what you’re paying and what you’re paying for. It also allows you to work with an advisor regardless of your assets.
A flat fee model may not make sense for you if you’re looking for a one-off engagement. In that case, you may be better served by an hourly advisor.
TJ van Gerven, CFP® | Memento Financial Planning
3. Hourly Fee Financial Advisors (with Retainer)
Some advisors work on an hourly basis, with prices ranging from $150 per hour to $400+ per hour. These prices do not change based on your total assets managed, so you only pay for the time you need with the advisor.
Many of these hourly services come with an up-front retainer cost, buying a block of hours upfront for the year for you to use when you want.
For example, if an advisor charges a $2,500 retainer fee at $250 an hour, you’ll have 10 hours of planning services available to use throughout the year. Each additional hour would then be billed at the normal hourly rate.
Some hourly financial advisors will give you full-service management of your investment portfolio (there may be additional fees for this), while others will only bill for 1:1 time and leave the money management and investing up to you (based on their guidance).
Best For – If you simply want access to a financial advisor to answer questions and help you build a financial plan, paying for an hourly-based financial advisor may be a good fit.
ASK THE EXPERTS
We asked hourly financial advisors to offer their perspectives on when and why people may want to hire a financial advisor who charges by the hour. Here’s what they said.
Hourly (or time-based) advice is highly flexible. It tends to make sense for someone who can self-implement recommendations, someone who is hands-on when it comes to their personal finances.
For example, if you’re looking for a second opinion on your investment portfolio or just need one-off financial advice, then a time-based fee for service (i.e., “hourly”) might be just what you’re looking for.
If you tend to delegate tasks or want someone to manage your investments for you, then hourly advice might not be a good fit for you. One of the cool things about hourly planning is that there really aren’t any restrictions on the type of clients that an advisor can work with.
Ryan Firth, CPA/PFS, CFP®, CCFC, GFP Fellow, RLP® | Mercer Street Financial
4. Financial Advisors who Charge a One-Time Fee (Modular Pricing)
Many financial advisors offer “a la carte” services, allowing you to choose the type of financial planning services you want to focus on. These services include budget planning, college funding, retirement planning, insurance planning, 401(k) review, and many other individual options.
These are typically billed as one-time fees, typically starting at $500. These are not comprehensive financial plans for all of your goals but focus on a specific area of need. Clients pay for the advice and plan, but it is on them to execute the details of the plan.
Best For – If you need help in a specific area and don’t want to spend thousands on a comprehensive plan, consider paying a one-time fee for a specific planning session.
5. Advice-Only Financial Advisors
If you consider yourself a DIY (do it yourself) kind of person, you’re not alone. Millions of Americans successfully start and complete DIY projects every day.
But just because you decide to do a project yourself doesn’t mean you have to learn how to do the task yourself. In fact, most DIY projects start with education in the form of instructional videos, articles, books, or even live demonstrations.
The same holds true when it comes to managing your personal finances and investing. If you consider yourself a DIY investor and are comfortable managing your own money, you may not want to hire a traditional financial advisor and turn over financial decision-making to someone else. Fortunately, a new breed of advice-only financial advisors has emerged as a popular choice among DIY investors interested in professional guidance at a very attractive cost.
An advice-only financial advisor offers financial planning and investment guidance to their clients, who are responsible for implementing the recommendations independently. Because they do not manage your investments for you, the cost of hiring an advice-only financial advisor is often considerably less than hiring a traditional financial advisor, especially for people with large investment portfolios.
Advice-only financial advisors are Registered Investment Advisors (RIAs) regulated by the Securities and Exchange Commission (SEC) or by state regulators where their services are available. Many advice-only financial advisors will hold their Certified Financial Planner certification and will likely charge an hourly or flat fee for their services.
Best For – DIY investors interested in professional guidance at a very attractive cost.
6. Financial Advisors who Charge Subscription-Based Fees (Annual or Monthly)
Some advisors don’t collect a fee based on the assets they manage for you but instead offer a subscription-like service, charging a monthly or annual fee for advisory services.
These services can range from $50 per month to $500 per month (or more), depending on the level of support needed.
Most of these subscription services charge a one-time fee to sign up and then a monthly (or annual) fee for ongoing support.
Depending on the level of service you sign up for, there are typically “packages” that offer a limited amount of annual meetings, reviews, and 1:1 time with your advisor. Typically, the more you pay, the more access and guidance you get from your advisor.
Best For – If you don’t have a large balance of investable assets but still want access to a financial advisor, the subscription model may be a good fit.
7. Financial Advisors who Charge Based on a Percentage of Your Income
A newer fee structure has emerged recently called the “percentage of income” model. Instead of charging a fee based on a percentage of your total assets, these advisors are charging a percentage of your current income.
This fee is designed to help those who may have a decent income but are at the beginning of their financial journey and don’t meet the minimum investment threshold for many traditional financial advisory firms (typically, $100,000 – $500,000).
Instead of paying 1% of assets under management, clients instead pay 1% of their annual income for financial advice. In this model, a $150k/yr earner would pay $1,500 per year for financial and investing advice.
Best For – If you have a good income but don’t have a large balance of investable assets and still want access to a financial advisor, the percentage of income model may be a good solution.
8. Commission-Based Financial Advisors
When a financial advisor is commission-based, they make commissions from selling you certain financial products (such as mutual funds, insurance products, and other types of securities). This model is becoming less and less popular, as there may be an inherent conflict of interest involved. There has been pushback against this model, as many clients have been sold financial products that they did not necessarily need, netting the advisor a hefty commission while the products underperformed.
An indicator that your advisor is commission-based is if they offer a financial product, such as a mutual fund, with a “front-loaded” fee structure. For example, if you invest $10,000 in a mutual fund with a 5.50% front-loaded fee, you will pay $550, and the remaining $9,450 will be invested.
Some of these funds claim to outperform the stock market over time, but always research the historical performance and reviews of any fund before you choose to invest.
Best For – If you want to avoid annual fees and don’t mind paying for financial products (as long as you understand them), you may consider a commission-based financial advisor.
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How to Choose a Financial Advisor
Now that you have the details of how most advisors charge for their services, here are a few things to review before choosing your financial advisor.
Decide Which Services You Need
Before hiring an advisor, determine what services you need from them. Whether it’s full-service investment management or a plan focused on a specific area of your finances, put together a list of what you’d like help with before contacting an advisor.
You may also want to consider hiring a financial advisor who specializes in serving clients with particular needs or interests. For example, many XY Planning Network financial advisors are dedicated to a specific niche (e.g., business owners, attorneys, doctors, educators, and more).
Review Fee Structures
Once you have a list of services you would like, review the fee structures offered by financial advisors. Finding a balance between the services you need and their cost will help you narrow down the field of advisors you may want to work with.
If you are looking for a full-service advisor to manage all of your investments, consider searching among fee-based financial advisors who offer the AUM pricing model. If you want to manage your money yourself, consider the flat fee and monthly subscription advisors for ongoing support.
Interview Multiple Advisors
Once you have chosen the services and fee structure you desire, it’s time to contact a few advisors and interview them. Here are a few questions to ask when interviewing a financial advisor:
- What services do you provide?
- What are all the ways you get paid? (fee transparency)
- What is your investment strategy?
- How do you measure investment performance?
- How do we communicate about my plan?
➡️ Related Article: Top Questions to Ask a Financial Advisor
Interview multiple advisors to get a feel for who you want to work with. A combination of fees, services, and customer service will help you determine the best fit for your financial advice. And remember, you don’t need to consider working only with local financial advisors. Many advisors work with clients nationwide as virtual advisors, using Zoom calls, email, and chat to stay in touch about your plan.
Check Advisor Credentials
Once you find an advisor (or two) that you feel comfortable with, it’s always a good practice to check their credentials, such as the financial certifications they hold and the details of their firm. You can do this at the Investment Adviser Public Disclosure (IAPD) website.
You can check both the individual and the firm to view their background and experience details, as well as any disciplinary action taken against them or their firm. Since financial advisors operate in a highly regulated industry, often acting as fiduciaries, there is oversight into how financial advisors conduct business, so running a quick (free) check on them is recommended. It’s worth reading their client reviews, too. If you find a negative one, our guide explains how to tell whether it matters.
Are You Ready to Hire a Financial Advisor?
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FAQs: Financial Advisor Costs
Here are some common questions about financial advisor fees.
FAQs
Jacob Wade
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What this article covers
Life insurance is typically purchased to protect your family — but some permanent life insurance policies can also serve as a tax-advantaged retirement savings vehicle. A Life Insurance Retirement Plan, or LIRP, uses the cash value built up inside a permanent policy as a source of tax-free retirement income. This article answers seven key questions about LIRPs: what they are, how cash value works, how you’d use one in retirement, the pros and cons versus a 401(k) or IRA, when one actually makes sense, and what the alternatives are — plus candid perspective from two financial advisors on when LIRPs help and when the sales pitch doesn’t tell the full story.
If you’ve ever thought of life insurance, it was probably colored by the instinctive unease of thinking about your mortality – the fact that one day you’ll no longer be among the living.
After all, that’s the main reason to buy life insurance – making sure that your passing, as traumatic an emotional loss as it’s likely to be for your loved ones, won’t also be a financial catastrophe.
There are many financial responsibilities life insurance can help cover:
- Replacing income: With you gone, a significant part of your family’s income will likely also go away.
- Paying off debts: Paying a mortgage, student loans, auto loans, credit card balances, etc., likely makes up a large part of your family’s budget. Paying these off reduces ongoing income needs.
- Succession planning for a business: If you’re a key person in a business, life insurance can provide capital to mitigate problems caused by your passing, e.g., hiring a (possibly higher-cost) replacement.
- Compensating heirs: If your estate comprises assets difficult to split equally, especially if your heirs don’t get along, life insurance can compensate those who don’t get a fair share of such assets.
- Estate taxes: If your estate is large enough to trigger estate taxes, especially if it comprises mostly illiquid assets (e.g., real estate and/or businesses), a death benefit can cover estate taxes without forced selling of assets at a difficult and potentially inopportune time.
- Funeral expenses: Your passing will likely be traumatic for those you leave behind. Covering the significant expenses of your funeral and burial avoids making a terrible time even worse.
- College expenses: If you have young children and haven’t set aside enough to cover the full cost of college attendance, life insurance can let them attend their preferred schools.
- Charitable giving: If you’re keen on leaving a larger bequest for a charity or your alma mater than your estate allows, a life insurance policy can make that possible.
However, life insurance policies can also help in a variety of ways while you’re still alive, including:
- Long-term care (LTC): If you lose your ability to carry out for yourself two or more of the six so-called Activities of Daily Living (ADLs: bathing, eating, dressing, transferring (e.g., in/out of bed/chair), continence, and toileting), you’ll need expensive help with these. LTC coverage is often available as a rider on life insurance policies (increasing premiums).
- Loan collateral: Some policies can be used to secure loans that would otherwise be more expensive or not available.
- Access to loans: Permanent (not term) life insurance policies typically have a “cash value” associated with them that can be borrowed from.
- Tax-free retirement income: This is what Life Insurance Retirement Plans (LIRPs) are all about, as explained below.
What Is a LIRP?
Any permanent life insurance policy with a cash value component that will help fund your retirement serves as a LIRP. Since you can borrow or withdraw from the policy’s cash value after age 59½ with no taxes owed except on gains, LIRPs have many of the tax benefits of a Roth IRA. Since term life policies have no cash value, they cannot be LIRPs.
With a LIRP, you pay in more than the required policy premiums, thereby building your cash value faster. Letting that value grow until retirement lets the LIRP be used as part of your retirement planning. LIRPs aren’t formally retirement plans in a legal sense. However, they can serve a similar purpose with similar tax benefits.
Key Takeaways
A Life Insurance Retirement Plan (LIRP) is not a formal retirement account — it’s a permanent life insurance policy that’s overfunded to build cash value you can borrow against tax-free in retirement.
LIRPs are funded with after-tax dollars, and you can borrow against the policy’s cash value after age 59½ without owing taxes on the loan proceeds — similar to a Roth IRA in that respect. Unlike term life insurance, permanent policies (whole life, universal life, indexed universal life) build cash value that grows tax-deferred over time. The critical word is “borrow” — you’re taking a loan against your policy, not a distribution, and outstanding balances reduce your death benefit if unpaid at death.
For most people, maxing out a 401(k) and IRA is a better choice than a LIRP — but LIRPs can make sense as a supplemental strategy for high earners who have already maxed out all tax-advantaged accounts.
401(k) plans and IRAs offer lower fees, more investment options, and typically better long-term returns than any life insurance policy. LIRPs carry higher costs, less liquidity, and surrender penalties that can make early exit expensive. The case for a LIRP strengthens specifically when you’re already maxing contributions to 401(k), IRA, and HSA accounts and need additional tax-advantaged savings capacity — or when you genuinely need permanent life insurance coverage regardless of retirement income strategy.
Indexed universal life policies are frequently marketed with “market-like returns with no downside risk” — but that pitch typically omits dividends, fees, commissions, and surrender penalties that materially affect real-world performance.
Indexed universal life (IUL) policies link returns to a market index like the S&P 500, with a floor that protects against loss and a ceiling that limits upside. What salespeople often don’t mention: the index calculation typically excludes dividends (which historically account for roughly 40% of total stock market returns), and the product carries commissions, administrative fees, and cost-of-insurance charges that compound over time. Before purchasing any LIRP, consult a fee-only financial advisor and a fee-only insurance advisor with no commission incentive.
How Does Cash Value Work in a Permanent Life Insurance Policy?
As mentioned above, the part of each permanent life insurance policy’s premium payment exceeding what’s needed to cover your death benefit builds up the policy’s cash value – a sort of tax-deferred savings account under your name and linked to the policy. Your policy type determines how returns on that value are calculated.
This may be a set fixed interest rate, or a variable return linked to a market-based index such as the S&P 500, albeit with a ceiling above which returns go to the insurer and a floor that preserves your principal.
The cash value is usually used to pay your premium for you (once it’s high enough) and/or to increase the death benefit. However, once it reaches an amount set by your policy, you can withdraw and/or borrow against a portion of your cash value (typically up to 90%). As long as the withdrawals and/or loans aren’t more than the amounts you paid into your cash value, these withdrawals/loans can provide tax-free retirement income.
One caveat is that if you borrow and die before paying it back, this will decrease the death benefit to your beneficiaries.
How Can You Use a LIRP in Retirement?
First, you build up a large cash value by over-funding your policy.
Then, once you retire, you borrow against (typically up to 90% of) the cash value that built up over your working career. As long as you don’t exceed the policy’s limit, you can borrow any amount(s) you want whenever you want.
For example, if you spend more than your Social Security benefits, portfolio returns, and/or other income sources will cover, you can borrow from your LIRP as needed to cover the gap (e.g., monthly, annually, or periodically). This can be especially helpful if you want to avoid selling shares at depressed prices during a market crash. Then, when the market recovers, you can use excess portfolio returns to pay back the LIRP loans.
Once you die, the insurer will first repay itself for any outstanding balances and accrued interest from the policy’s cash value. If that’s not enough, they’ll take the rest out of the death benefit before paying it out to your beneficiaries.
What Are the Pros and Cons of a LIRP?
As with all things, LIRPs have both pros and cons or limitations, summarized in the following table.
LIRP Pros and Cons Compared
| LIRP Pros / Advantages | LIRP Cons / Drawbacks / Limitations |
|---|---|
| Loans in retirement are tax- and penalty-free (if you’re 59½ and the account is 15 years old). Can also take loans before retirement at any age (though penalties are possible if classified as MEC). | Overfunding beyond IRS-determined annual limits turns the policy into a Modified Endowment Contract (MEC) with tax and penalty implications, especially for withdrawals before age 59½. |
| Loans can be taken when markets crash and paid back when markets recover (or not until death). | Loans accrue interest that must be paid by you, or by cash value or death benefit if unpaid when you die. |
| Loans can be used to reduce your marginal tax rate and/or taxation of Social Security benefits, especially in years with higher spending. | Withdrawals and/or loans exceeding contributions may be taxable. |
| Loans can be repaid anytime or when you die, unlike 401(k) loans that must be repaid if you leave the employer (or be taxed and penalized if too young). | Withdrawals may trigger fees if taken too early. |
| In some types of policy, LIRPs get higher returns in years when investment markets go up. In other types, get guaranteed (albeit low) interest. | Investment choices are more limited and returns lower than those of most 401(k) plans and IRAs. |
| No contribution limits (though above an IRS-set annual threshold, the policy becomes a MEC); cash value grows tax-deferred; and no Required Minimum Distributions (RMDs). | Contributions are not tax-deductible. |
| Guaranteed tax-free death benefit (LIRPs are life insurance policies). If a large death benefit isn’t needed, you can buy a cheaper policy with a lower death benefit while building the same cash value. | Permanent life insurance premiums are typically 5–15× higher than term policies with the same death benefit, and fees may be high. Premiums are ongoing if you want to maximize cash value. |
| Depending on riders, may get accelerated living benefits (e.g., in case of terminal illness). | May not be needed if the portfolio is large enough; may be a poor choice if you can’t max out 401(k) and IRA. |
This comparison covers the most common LIRP structures. Individual policy terms, fees, and tax treatment vary significantly. Consult a fee-only financial advisor and a fee-only insurance advisor before purchasing any permanent life insurance policy for retirement income purposes.
Are LIRPs Better Than a 401(k) or IRA?
401(k) plans and IRAs have significant advantages for funding your retirement. These include tax benefits (tax-deferred traditional accounts or tax-free growth for Roth accounts) and possible employer matching contributions for 401(k) plans.
LIRPs, on the other hand, are funded with after-tax dollars like a Roth, but earnings are tax-deferred like in a traditional retirement plan, offering the worst of the two – traditional and Roth.
These dedicated retirement plans also typically offer a wide variety of investment options, and many have far higher average annual returns than offered by any life insurance policy.
For these reasons, most people would be better off maxing out contributions to their 401(k) and/or IRA before considering putting money into a LIRP.
When Might a LIRP Make Sense?
The situation that makes a LIRP most beneficial is if you’re already maxing out all tax-advantaged retirement plans available to you, e.g., 401(k)/403(b)/457(b) plans, IRAs, and possibly Health Savings Accounts (HSAs), but want a higher income in retirement than those will allow.
The younger you are, the lower life insurance premiums become for the same death benefit, making LIRPs less expensive.
If you expect to need to provide for your beneficiaries more than your estate will allow regardless of your age at death (e.g., you have one or more disabled children), that makes the case for the LIRP even more compelling since you need a permanent life insurance policy.
This is not the case for most people whose financial obligations and responsibilities decrease over the years as they pay off their mortgage and other debts, their children become independent adults, and their portfolio may grow enough to cover their widow(er)’s needs.
Jorey Bernstein, Executive Director, Wealth Manager, and Founder, Bernstein Investment Consultants, agrees, “A LIRP can be valuable to a client’s retirement portfolio when used appropriately. These policies let you save for retirement in a tax-advantaged way while also providing life insurance protection. LIRPs make the most sense for clients who maximize contributions to standard retirement accounts, own a business, or want to diversify their assets and leave tax-free money to heirs. However, LIRPs have higher fees and less liquidity than other investment vehicles. We always analyze a client’s full financial picture when making recommendations. For the right investor, LIRP can provide supplemental funds to help meet retirement income goals.”
What Are the Alternatives to a LIRP?
Assuming you need life insurance and recognize the need to fund your eventual retirement, and unless you fall into the above-mentioned category of people who’d benefit most from a LIRP, your best alternative is likely to buy term life insurance coverage and invest as much as you can in tax-advantaged plans like an IRA and/or 401(k), especially to capture your employer’s full contribution match. Note that the Roth versions are better than traditional accounts for most.
If you want to invest more than the contribution limits allow, consider low-cost deferred annuities and/or tax-efficient investing through a taxable account as alternatives to the LIRP.
Aside from their lower premiums, term policies, as their name implies, have a set term; they can also be dropped without surrender charges or other complications that often arise when canceling permanent life insurance policies.
The Bottom Line
LIRPs are far more complicated than 401(k) plans and IRAs and come with a raft of pros and cons (see the table above).
For some people, LIRPs provide a good way to set aside more money for tax-deferred growth than formal retirement accounts allow. LIRPs can provide guaranteed interest or variable index-linked returns with a floor that secures their principal and a ceiling beyond which the insurer takes excess returns.
This is especially helpful for people who also expect to always need insurance to provide for beneficiaries such as disabled children who cannot fend for themselves, even as adults.
For most of us, it’s better to buy the right amount of term life insurance only for as long as the death benefit will be needed and invest as much as we can in our 401(k) plans and IRAs. Although contributions to these are limited by the IRS, most people can rarely max those contributions.
And if you don’t expect to need permanent life insurance, even if you regularly max out your formal retirement plans, you may be better served by a tax-efficient taxable portfolio and/or deferred annuities than a LIRP.
Finally, since LIRPs are insurance policies and come with a host of complexities and costs, consult your financial advisor and life insurance agent before making such a major decision.
As Jeremy Keil, CFP, CFA, Financial Planner with Keil Financial Partners, says, “Cash-value life insurance may make sense as an alternative to bonds or CDs since the insurer generally invests in bonds so returns are usually bond-like. Often with LIRPs, the salesperson will tell you that you get ‘market-like returns’ with no chance of losing money. For some reason, they rarely mention the fact that you don’t get dividends from an indexed universal life policy, or that there are commissions, costs, fees, and surrender penalties for exiting the contract. Before buying life insurance, especially an indexed universal policy, do some research, e.g., through theiulexperiment.com and perhaps hire a fee-only insurance advisor to help you make the right decision.”
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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
About the Author
Opher Ganel
My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals.
Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.
What this article covers
If your income is too high to contribute directly to a Roth IRA, the “backdoor” Roth conversion is a popular workaround — but a little-known IRS rule called the pro-rata rule can turn it into an expensive tax mistake if you’re not careful. This article explains exactly what the pro-rata rule is, how it calculates your tax liability when you have pre-tax money in traditional IRAs, and four strategies financial advisors use to help high earners avoid the trap — including one underused approach that works particularly well but that some advisors may not proactively mention.
Taxes. One of the most hated aspects of personal finance, but without them, we don’t have a country. So, unless you want to get in serious trouble and potentially go to jail, you must pay Uncle Sam his due.
The US tax code is infamous for its complexity, resulting in over 510,000 tax accountants, over 1.7 million bookkeepers, 79,000 IRS employees, and hundreds of thousands of workers in other related jobs (tax associates, tax assistants, tax advisors, etc.) in the US. And that’s not counting the 0.6% of the average 1,872 annual hours of full-time work it takes 134 million taxpayers to file tax returns.
All told, nearly 1 in 50 American workers’ jobs relate to taxes, be it collecting taxes, reporting them, or helping the rest of us minimize and reduce them.
Key Takeaways
The IRS pro-rata rule means that if you have pre-tax money in any traditional IRA, a “backdoor” Roth conversion won’t be tax-free — the IRS treats all your IRA money as a single pool and taxes your conversion proportionally.
High earners often use the backdoor Roth conversion as a workaround to Roth IRA income limits — making a non-deductible traditional IRA contribution and immediately converting it to a Roth. The pro-rata rule disrupts this strategy by treating the conversion as if it contains the same pre-tax/after-tax ratio as all your IRA assets combined. The larger your pre-tax IRA balance, the smaller the after-tax portion of your conversion — and the larger your unexpected tax bill.
The most elegant solution for most high earners is to roll pre-tax IRA money into a pre-tax 401(k) before attempting a backdoor Roth conversion — but this only works if your plan allows it.
The IRS does not lump 401(k) balances together with IRA balances for pro-rata rule purposes. Rolling pre-tax IRA money into a workplace 401(k) effectively removes it from the pro-rata calculation — after which a backdoor Roth conversion of new non-deductible IRA contributions can proceed tax-free. As one advisor notes, this is a massively underused strategy that some AUM-based advisors may not proactively mention because it reduces their fee base.
There are four strategies to avoid the pro-rata trap — but each comes with its own limitations, and the right approach depends on your income, existing IRA balances, and 401(k) plan rules.
The four strategies are: contributing exclusively to Roth IRAs from the start; converting existing pre-tax IRAs to Roth (creating a potentially large tax bill in the conversion year); contributing to a Roth 401(k) instead; or rolling pre-tax IRAs into a pre-tax 401(k). None is a universal solution — which is why high-income earners navigating backdoor Roth conversions consistently benefit from working with a tax-savvy financial advisor or CPA who handles these situations regularly.
Table of Contents: The Pro-Rata Rule
- Why High Earners Need a Backdoor Roth Strategy and Where the IRS Pushes Back
- The Retirement Accounts at the Center of the Pro-Rata Rule
- Roth IRAs and Roth 401(k) Plans
- Income Limits on Roth IRA Contributions
- The Backdoor Roth Conversion: How It Works
- How the Pro-Rata Rule Defeats the Backdoor Conversion
- Four Ways to Avoid the Pro-Rata Rule Trap
- What Financial Advisors Recommend: Real Strategies from CFPs and CPAs
- The Bottom Line: Which Strategy Is Right for You?
- Find Financial Advisors on Wealthtender
Why High Earners Need a Backdoor Roth Strategy and Where the IRS Pushes Back
Over time, our tax law was crafted to try and promote what lawmakers think is good for the country (or at least for their constituency and/or donors).
One such “good” is that people save for their own retirement.
Enter tax deductions for retirement plan contributions such as Individual Retirement Arrangements (IRAs) and 401(k) plans. However, not wanting to let high-income earners take too much advantage, the IRS sets annual contribution limits for these plans.
For 2026, the IRA contribution limit is $7,500 ($8,600 if you’re 50 or older). If you or your spouse are covered by a workplace retirement plan, there are limits on how much you can earn and still deduct your traditional IRA contribution. For 2026, deductibility phases out if your Modified Adjusted Gross Income (MAGI) is above $81,000 if you’re single or head of household, reaching zero deductibility at $91,000 MAGI. If you’re married filing jointly and the contributing spouse is covered by a workplace plan, the phase-out range is $129,000–$149,000. If you’re married filing separately and lived with your spouse at any point during the year, the deduction phases out starting at just $1 of MAGI and is completely eliminated at $10,000 — one of the most restrictive limits in the tax code and an easy one to miss. If neither you nor your spouse is covered by a workplace plan, your traditional IRA contribution is fully deductible regardless of income.
For married filing jointly or qualifying widow(er), deductibility starts phasing out at $218k MAGI and reaches zero at $228k MAGI.
The 2026 limits for 401(k) plans are a bit more complicated because there are three separate limits.
- Employee deductible contribution limit of $24,500 ($32,500 if you’re 50 or older; or up to $35,750 if you’re between ages 60–63 and your plan allows the SECURE 2.0 super catch-up)
- Employer deductible contribution limit of 25% of employee compensation (on compensation up to $360,000)
- Total contribution limit of $72,000 ($80,000 if you’re 50 or older; up to $83,250 if you’re between ages 60–63 and your plan allows the super catch-up)
Once you reach your employee deductible contribution limit, if that plus your employer match is less than the total limit (if the plan allows it), you can add an after-tax contribution up to your total limit.
The Retirement Accounts at the Center of the Pro-Rata Rule
According to the Investment Company Institute (ICI), there are 60 million active 401(k) participants. There are also about 10 million 403(b) participants and about 7 million 457(b) participants (these are the nonprofit/government version of the 401(k)).
US Census data shows about 52.6% as many IRAs as 401(k)/403b)/etc. accounts, so there are likely about 41.5 million IRAs.
Roth IRAs and Roth 401(k) Plans
A new type of IRA, the Roth IRA, was introduced in 1998.
Eight years later, in 2006, the Roth 401(k) was introduced.
The difference between Roth and traditional accounts is that Roth contributions are done with after-tax dollars. Instead of the traditional IRA (or 401(k)) contribution deduction, the Roth’s tax benefit is that no taxes are ever owed on any withdrawals, including on earnings.
Another benefit of the Roth IRA is that once the account has been open for five years, you can withdraw your contributions tax- and penalty-free, no matter your age.
According to ICI, about 1/3 of IRAs are Roth IRAs, so we can estimate that’s about 14 million Roth IRAs.
Per CNBC, about 28% of 401(k) participants make Roth contributions, so if the same holds for 403(b) and 457(b) plans, there are about 22 million Roth plans of these types.
Income Limits on Roth IRA Contributions
The same contribution limits apply to the Roth versions as to the traditional IRA and 401(k).
However, Roth IRAs are limited in another way. You cannot contribute directly to a Roth IRA if your MAGI is too high. The income limits for 2026 are $168,000 for single filers (with the phase-out beginning at $153,000) and $252,000 if married and filing jointly (phase-out beginning at $242,000).
The Backdoor Roth Conversion: How It Works
With millions of tax professionals, it wasn’t long before someone figured out a clever and elegant workaround called the “backdoor” Roth conversion.
Since you’re precluded from making a Roth contribution and/or a deductible traditional IRA contribution, you follow this two-step process:
- Make a non-deductible, after-tax contribution into a traditional IRA.
- Immediately roll the money over from the traditional IRA to a Roth IRA (since you do this immediately, there are no earnings, so all the money transferred is after-tax)
However…
How the Pro-Rata Rule Defeats the Backdoor Conversion
Uncle Sam isn’t one to take such shenanigans lying down.
The IRS has a counter to this backdoor trick called “the pro-rata rule.”
What this rule does is treat all money you have in however many IRAs you own as if it were in a single account.
Then, when you roll money over from a traditional to a Roth IRA, the IRS treats the rollover as if it has a proportional fraction of pre-tax and after-tax money as your overall IRA holdings, i.e., only a pro-rata amount is considered after-tax.
The calculation goes like this:
(Presumed After-Tax) = (Rollover Amount) x (Total After Tax)/(Total Pre- and After-Tax)
The following table shows some examples if all your IRA money is pre-tax.
Table 1 — Pro-Rata Impact: All IRA Money Is Pre-Tax
Assumes a $7,500 non-deductible after-tax contribution (2026 limit) and immediate rollover to Roth IRA. All existing IRA money is pre-tax.
| Pre-Tax Total in All IRAs | After-Tax Total Incl. New Contrib. | Presumed Pre-Tax Portion of Rollover | Presumed After-Tax Portion of Rollover |
|---|---|---|---|
| $0 | $7,500 | $0 | $7,500 |
| $50,000 | $7,500 | $6,522 | $978 |
| $100,000 | $7,500 | $6,977 | $523 |
| $250,000 | $7,500 | $7,282 | $218 |
| $500,000 | $7,500 | $7,389 | $111 |
Calculated using the pro-rata formula: Presumed After-Tax = $7,500 × $7,500 ÷ ($7,500 + Pre-Tax Total). Updated for the 2026 IRA contribution limit of $7,500.
If you already have some pre-tax and some after-tax IRA money, the results change for the better:
Table 2 — Pro-Rata Impact: Mixed Pre-Tax and After-Tax IRA Balances
Assumes a $7,500 non-deductible after-tax contribution (2026 limit) and immediate rollover. Existing IRA balances include both pre-tax and after-tax money.
| Pre-Tax Total in All IRAs | After-Tax Total Incl. New Contrib. | Presumed Pre-Tax Portion of Rollover | Presumed After-Tax Portion of Rollover |
|---|---|---|---|
| $0 | $7,500 | $0 | $7,500 |
| $30,000 | $27,500 | $3,913 | $3,587 |
| $60,000 | $47,500 | $4,186 | $3,314 |
| $150,000 | $107,500 | $4,369 | $3,131 |
| $300,000 | $207,500 | $4,434 | $3,066 |
Calculated using the pro-rata formula: Presumed After-Tax = $7,500 × After-Tax Total ÷ (Pre-Tax Total + After-Tax Total). Updated for the 2026 IRA contribution limit of $7,500.
The silver lining is that by paying taxes in the present on the large fraction of the backdoored money, you’re reducing the number of pre-tax dollars in your IRAs.
Four Ways to Avoid the Pro-Rata Rule Trap
Just like with any other arms race, here too, each advance made by one side is soon negated or worked around by the other.
Tax pros have come up with four ways to avoid the pro-rata rule. As you’ll see, however, none provide a complete solution for everyone.
- Contribute only to Roth IRAs: If you know in advance that you’ll end up wanting to make Roth IRA contributions and will likely earn too much, you could make all your IRA contributions into Roth accounts. The drawbacks are that (a) this requires very early planning, and (b) you give up IRA-contribution tax deductions throughout your career in return for having all your IRAs be tax-free Roths.
- Convert traditional pre-tax IRAs to Roth IRAs: Before trying a backdoor Roth conversion, you can convert all your pre-tax IRA money into Roths. The problem here is that every dollar you convert counts as income in the year you convert it, leading to potentially extremely high tax bills (due to the higher income your taxable income is higher, and you may even be pushed into higher tax brackets).
- Contribute to Roth 401(k) instead: Since Roth 401(k) contributions are allowed regardless of your income, you can make Roth 401(k) contributions instead of the backdoor IRA conversion. Here the problem is that if you already max out your 401(k) contribution you can’t do this.
- Roll pre-tax IRAs into pre-tax 401(k) plan: If your 401(k) plan allows rolling IRA money over into it, this is the most elegant solution. Since the IRS does not lump 401(k) and IRA money together for the purpose of the pro-rata rule, you roll all your pre-tax IRA money into a pre-tax 401(k) (which isn’t a taxable event). Then, make the two-step backdoor Roth conversion described above.
What Financial Advisors Recommend: Real Strategies from CFPs and CPAs
Angela Dorsey, CFP®, MBA, Financial Planner, Dorsey Wealth Management, says, “I’m super conservative with backdoor conversions – I don’t want clients to get in trouble with the IRS! I only do backdoor conversions if there are no pre-tax IRAs so there’s no issue. If clients do have pre-tax IRAs, I suggest starting with a tax-efficient Roth conversion strategy that doesn’t push them into a higher tax bracket.”
Matt Pruitt, CFP®, CFA®, Exhale Wealth Management emphasizes, “Rolling your pre-tax IRAs into your pre-tax 401(k) is a massively under-utilized strategy, and not all advisors are motivated to tell you about it. That’s because it reduces “assets under management” or AUM, which reduces fees for many advisors. If working with such a financial advisor, you may need to bring this to their attention proactively.”
Christopher Johns, Wealth Advisor, Spark Wealth Advisors, agrees, “For clients who have pre-tax IRAs, I recommend rolling those IRAs into their 401(k) as mentioned above. I also advise high-earning clients who transition to a new job and don’t already have pre-tax IRAs to keep their old 401(k) where it is or roll it into their new 401(k), avoiding the creation of pre-tax IRA balances.”
Cobin Soelberg, MD, JD, Founder and Principal Advisor, Greeley Wealth Management, expands, “I work primarily with physicians who, as a rule, earn too much to contribute to Roth IRAs directly. They’re also in high tax brackets, so Roth 401(k) plans tend not to make the most sense during their highest-earning years. However, as noted above, getting some money into post-tax Roth accounts is a huge win. For almost every client, we discuss backdoor Roth IRA contributions each January. The first year is when we align everything. If they have moderate balances in pre-tax IRAs, we convert those into Roths. If the balances are too large, we move them into a workplace or solo 401(k). Then, once the pre-tax IRA balance is $0, we start making annual backdoor Roth conversions.”
The Bottom Line: Which Strategy Is Right for You?
There’s a lot to like about Roth IRAs.
This is why people try to get around the income limits imposed on direct Roth IRA contributions through the so-called backdoor conversion.
The problem is that if you have a lot of money in pre-tax IRAs, you’d be trapped by the pro-rata rule and have to pay taxes on much (or nearly) all of the backdoored money. If you roll pre-tax 401(k) money into a pre-tax IRA, this problem becomes worse.
The above provides four ways to avoid falling into this trap, though each path has its own limitations and conditions.
Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
About the Author
Opher Ganel, Ph.D.
My career has had many unpredictable twists and turns. A MSc in theoretical physics, PhD in experimental high-energy physics, postdoc in particle detector R&D, research position in experimental cosmic-ray physics (including a couple of visits to Antarctica), a brief stint at a small engineering services company supporting NASA, followed by starting my own small consulting practice supporting NASA projects and programs. Along the way, I started other micro businesses and helped my wife start and grow her own Marriage and Family Therapy practice. Now, I use all these experiences to also offer financial strategy services to help independent professionals achieve their personal and business finance goals. Connect with me on my own site: OpherGanel.com and/or follow my Medium publication: medium.com/financial-strategy/.
Learn More About Opher
What this article covers
Retirement is one of the most financially complex transitions most people will ever navigate — and it’s one you only get to do once. The Chartered Retirement Planning Counselor (CRPC) designation identifies financial advisors who have completed specialized training focused exclusively on pre- and post-retirement planning: Social Security optimization, Medicare decisions, income distribution strategies, long-term care insurance, tax-efficient withdrawals, and estate planning. This guide explains what the CRPC designation is, what distinguishes it from a generalist financial planner, what it takes to earn it, and how to find a CRPC on Wealthtender who can help you retire confidently.
A Chartered Retirement Planning Counselor (CRPC) is a financial professional focused on retirement planning. The CRPC program is designed for new and experienced advisors who seek to define a “road map to retirement” for their clients. There is a focus on clients’ pre-and post-retirement needs and issues related to asset management and estate planning.
Key Takeaways
The CRPC is the industry benchmark for retirement planning credentials — recognized by top financial firms and designed for advisors who specialize in helping clients navigate the transition from work to retirement.
Administered by the College for Financial Planning (now part of Kaplan), the Chartered Retirement Planning Counselor designation focuses on pre- and post-retirement planning, covering Social Security, Medicare, investment strategies, distribution planning, long-term care insurance, tax efficiency, and estate planning. It goes substantially deeper into retirement-specific topics than generalist credentials, making it the right credential to look for when your primary need is retirement income planning rather than broad financial planning.
Social Security and Medicare planning are among the most complex — and most costly to get wrong — decisions most retirees will face, and a CRPC specializes in both.
A single misstep in Social Security timing — claiming too early, or missing a spousal benefit strategy — can cost tens of thousands of dollars over a retirement. Medicare decisions, including the interaction between income levels and IRMAA surcharges, add another layer of complexity. A CRPC who handles these federal program decisions daily can deliver meaningful financial value that easily exceeds the cost of their services, particularly for clients approaching or just entering retirement.
The CRPC credential requires no prerequisites but demands a rigorous self-study or instructor-led course, a proctored exam, and 16 hours of continuing education every two years — ensuring the designation reflects current retirement planning knowledge.
Candidates must pass the final exam with a score of 70% or higher within two attempts, and the exam grade serves as the overall program grade. Ongoing renewal requires reaffirming professional conduct standards in addition to continuing education — a structure that ensures CRPC holders remain current on Social Security, Medicare, tax law, and investment strategy as they evolve over time.
How the CRPC Designation Works and What Sets It Apart from Other Credentials
Financial professionals who hold the CRPC demonstrate expertise in retirement planning beyond standard industry testing and licensing programs. According to the College for Financial Planning, the credentialing organization, and sponsor of the CRPC designation, individuals must complete an online instructor-led or self-study course program, pass a final designation exam (online and timed), and complete 16 hours of continuing education every two years to earn the right to use the CRPC marks.
CRPCs specialize in a complex niche – retirement planning. Those seeking guidance on preparing for life after full-time employment should consider working with a CRPC since they are retirement planning specialists rather than financial planning generalists.
Advisors holding the CRPC have done the groundwork so they can help retirees and pre-retirees in areas such as Social Security, Medicare options, investment strategies, retirement account distribution strategies, long-term care insurance planning, and even the Affordable Care Act’s rules. The College for Financial Planning states that “the CRPC designation program is designed for both intermediate and experienced advisors who wish to provide more comprehensive retirement planning advice to individual clients and families.“
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Should You Hire a CRPC?
Consider hiring a CRPC for specific assistance with retirement planning. A CRPC helps tailor plans for clients and ensures goals are being met and risks are appropriately managed in retirement. A CRPC designation can complement the Certified Financial Planner (CFP) designation.
The College for Financial Planning boasts that the CRPC designation is recognized as the industry benchmark for retirement planning credentials and is endorsed by top financial firms. The College administers many other professional designation programs, so an advisor with the CRPC marks has a strongly-regarded institution cosigning their prowess.
Individuals and couples should look to the help of a CRPC on such issues as:
Social Security and Medicare Planning
Few areas of retirement planning are more complicated than navigating the world of Social Security and Medicare. One misstep can mean thousands of dollars (or more) of lost income or increased expenses. A CRPC that handles issues with these federal programs daily can deliver significant value.
Preparing for Retirement
Many individuals and couples underestimate the importance of making the right moves in the years leading up to retirement. Bridging the gap between late career and early retirement helps build the foundation for a secure and long-lasting retirement.
Reducing Financial Risks
Developing new income streams during retirement helps mitigate longevity risks and market risks. Researching and buying the right insurance policies is also critical to reducing financial risks. A CRPC can help in these areas.
Tax and Estate Planning
Leaving a legacy is important to many retirees. A CRPC can work with clients to outline the most effective charitable giving plan and strategies to leave the most money to heirs.
There are many facets to retirement. It’s not as simple as calling it quits from the 9-5 working world and then relaxing on a beach. Careful planning and strategy are required. An experienced financial planner who holds the CRPC designation can help design and manage the right retirement plan.
What Does it Take to Earn and Maintain the CRPC?
The CRPC professional designation program includes coursework, an exam, successful completion of continuing education, and an ethics component. Candidates begin by taking classes—either live online or in person. There are no prerequisites.
The CRPC’s coursework covers the following areas:
- Maximizing the Client Experience throughout the Retirement Planning Process
- Principles and Strategies When Investing for Retirement
- Making the Most of Social Security Retirement Benefits
- Bridging the Income Gap: Identifying Other Sources of Retirement Income
- Navigating Health Care Options in Retirement
- Making the Emotional and Financial Transition to Retirement
- Designing Optimal Retirement Income Streams
- Achieving Income Tax and Estate Planning Objectives in Retirement
- Fiduciary, Ethical, and Regulatory Issues for Advisors
Upon completion of the coursework, candidates must pass a final exam with a score of 70% or higher. There is a 3-hour time limit, and candidates have a maximum of two attempts to pass the exam. The grade earned on the final exam reflects a candidate’s overall grade for the designation program.
After passing the exam, the candidate may apply for authorization to use the CRPC marks. The application includes committing to Standards of Professional Conduct and disclosing criminal events and investigations into professional conduct.
The certification also requires continuing education. A CRPC professional must apply for renewal of the designation every two years. 16 hours of CE credits are required, along with reaffirming the professional conduct policies mentioned earlier.
FAQs
How Can I Confirm the Financial Professional I’m Working with Holds the CRPC?
Visit the Find a Financial Advisor page on the Kaplan Financial website to see if an advisor has the CRPC designation. Using the search tool, you can find an advisor with the CRPC designation in your area.
What if I Have a Complaint About the CRPC I Hired?
Visit this page to contact the College of Financial Planning regarding issues with an advisor holding the CRPC designation. The Grievances section provides a link to the form to submit a complaint against a designee.
I’m a Chartered Retirement Planning Counselor interested in joining Wealthtender. How should I get started?
Thanks for your interest in joining Wealthtender. We’re excited to help CRPCs connect with people interested in the specialized experience and services you offer to help them achieve their retirement goals. You can learn more about Wealthtender by visiting this page: Modern Advisor Marketing with Wealthtender
Where can I learn more about other professional designations held by financial advisors and coaches?
Refer to this list of popular financial certifications prepared by Wealthtender to help you learn more about each designation. You’ll find a brief description of each certification, plus links to in-depth articles if you want to learn more about a particular designation.
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About the Author
Mike Zaccardi
Mike is a freelance writer for financial advisors and investment firms. He’s a CFA® charterholder and Chartered Market Technician®, and has passed the coursework for the Certified Financial Planner program.
What this article covers
As a business owner, you’ve invested years building something valuable — but without a thoughtful exit plan, you may not capture that value when it matters most. The Certified Exit Planning Advisor (CEPA) designation identifies financial professionals who have completed specialized training in helping business owners maximize value, minimize taxes, and plan for a successful transition on their own terms. This guide explains what the CEPA designation is, what it takes to earn it, whether you should hire one, and what CEPA-credentialed advisors and the Exit Planning Institute say about the process — along with a directory of CEPAs featured on Wealthtender.
As a business owner, you’re used to wearing multiple hats every day to ensure your customers are happy and your bottom line is growing. Thinking about selling your business may seem far off, but taking the time now to begin thinking about what a transition might look like ensures you’ll be prepared when you’re ready to sell and can help you maximize the value of your business along the way.
If you’re unsure where to turn for help, you’ll be glad to know there’s an organization dedicated to this very topic with thousands of members you can turn to with the experience and knowledge business owners need to plan for a successful transition.
The Certified Exit Planning Advisor (CEPA) is a unique designation for financial professionals who advise business owners on how to sell or transition their business successfully, a strategy referred to as ‘exit planning’.
The CEPA designation was established in 2007 by the Exit Planning Institute (EPI), a company focused on educating professional advisors globally on how they can support the success of business owners to maximize value and sell on their terms through a business transition.
Let’s take a closer look at what this financial certification is, what it takes to earn it, and how you may benefit from working with a CEPA as a business owner.
Key Takeaways
Between 70% and 80% of businesses offered for sale each year don’t sell — making early exit planning one of the most financially critical decisions a business owner can make.
Most business owners wait too long to begin exit planning, leaving little time to maximize valuation, structure the deal tax-efficiently, or prepare emotionally and financially for life after the business. A Certified Exit Planning Advisor (CEPA) helps business owners build and preserve wealth while simultaneously implementing best business practices — ideally beginning three to five years before a planned transition, not the year before.
The CEPA designation requires five years of direct experience working with business owners, a rigorous four-day course, and a proctored exam — making it the most widely recognized exit planning credential in the world.
Established in 2007 by the Exit Planning Institute, the CEPA trains advisors in the Value Acceleration Methodology — a framework that integrates business value maximization, personal financial planning, and life-after-business planning into a single cohesive strategy. More than 2,500 professionals hold the designation, drawn from financial advisory, accounting, legal, banking, and insurance backgrounds.
You don’t need to be planning an imminent sale to benefit from working with a CEPA — the earlier you start, the more value they can help you build and protect.
A CEPA can help you maximize business value, minimize taxes through provisions like the QSBS exemption, and prepare for unplanned events like disability, divorce, or death — regardless of when you ultimately intend to exit. Research shows 76% of business owners feel regret after their exit; working with a CEPA who plans for both the financial and personal dimensions of a transition significantly improves outcomes on both counts.
Table of contents
- Find a CEPA on Wealthtender
- Find Certified Exit Planning Advisors on Wealthtender
- What is a Certified Exit Planning Advisor (CEPA)?
- Should You Hire a CEPA?
- What CEPAs and Exit Planning Experts Say About Why Early Planning Matters
- What Does it Take to Earn and Maintain the CEPA?
- Why the Exit Planning Institute Says Business Owners Shouldn’t Wait
- FAQs
Find a CEPA on Wealthtender
With more than 2,500 CEPA designation holders, you’ll likely find several who may be a good fit for your business planning needs and unique circumstances.
You’ll find a growing number of CEPAs featured on Wealthtender listed below, and you can also search the directory of CEPA designation holders on the EPI website.
Find Certified Exit Planning Advisors on Wealthtender
📍 Click on a pin in the map view below for a preview of financial advisors who have earned their CEPA designation and can help you reach your money goals with a personalized plan. Or choose the grid view to search our directory of financial advisors with additional filtering options.
📍Double-click or pinch pins to view more.
What is a Certified Exit Planning Advisor (CEPA)?
The CEPA designation is for financial advisors and other professionals (e.g., attorneys, business brokers, Certified Public Accountants, etc.) who wish to support business owners with exit planning. At its core, exit planning allows business owners to maximize value and successfully transition their business on their own terms.
Professionals who hold the CEPA designation learn how to blend exit strategy into the business as well as the personal and financial goals of business owners. They use the Value Acceleration Methodology, a proprietary framework developed by EPI, which focuses on three major components including:
- Maximizing Business Value
- Personal Financial Planning
- Life After Business Planning
Through the Value Acceleration Methodology, advisors are able to educate business owners on how to build and preserve their wealth while simultaneously implementing the top business practices into their day-to-day operations.
CEPAs are often financial advisors, accounting, banking, insurance, or legal professionals who have undergone a rigorous four-day course, which is taught by experts in exit planning and held several times a year in various cities throughout the U.S.
In addition to completing four days of courses, CEPAs have passed a proctored exam. The CEPA is known as the most widely accepted and recognized exit planning program in the world.
“We work with a number of business owners, and there is a slew of issues to address,” said Joe Dunat MBA, CEPA Sturkie Wealth Management Group of Stratos Wealth Partners.
“From properly valuing the company, to tax planning around the liquidity event (several strategies available prior to the sale to minimize tax impact), to the final use of the proceeds to replace the business owner’s income, a financial advisor skilled at serving business owners is key.”
Should You Hire a CEPA?
A CEPA has the advanced exit planning expertise and depth of financial knowledge that may help you if you own a privately held business.
If you’re a business owner, a CEPA can guide you through the process of transitioning out of your business. You can expect them to help you figure out your goals on a professional, financial and personal level.
Once you’ve determined your goals, they’ll work with you to design a strategy to help you meet them by the time you transfer your business. You’ll find that a CEPA has greater knowledge of exit planning than a traditional financial advisor more knowledgeable in the general financial planning needs of business owners.
Even if you’re just preparing to launch your business or don’t have plans to exit your business in the near future, a CEPA can help ensure you’re prepared in the event of an unplanned event like disability, divorce, or death. Their support may allow you to maximize the value of your business, minimize your taxes through special provisions for small business owners like the QSBS exemption, and pursue a happy exit that satisfies your goals, regardless of what they may be. In addition, a CEPA may reduce uncertainty for your key stakeholders, employees, and family.
What CEPAs and Exit Planning Experts Say About Why Early Planning Matters
Larry Sprung, CFP® CEPA®
“For many business owners, their identity is deeply intertwined with the company they have built. That’s why helping them plan for what comes next is so meaningful to me.
The CEPA® designation gives me the tools to support that full journey, from increasing the value of the business to creating a personal plan for life beyond it. Because it isn’t just about an exit, it’s about designing the next chapter that brings you JOY. With 76% of owners feeling regret after their exit, we focus on making sure the transition reflects what matters most to them, their values, and their ideal version of life after the sale.”
Deborah Meyer, CFP®, CPA/PFS, CEPA
“Selling a business that you built from the ground-up isn’t cut and dry. You have many options as a business owner, and it’s wise to get strong counsel from an experienced advisor who can help you navigate the complexities of a business sale. In fact, between 70% and 80% of privately held businesses that are offered for sale each year do not ultimately sell.
A Certified Exit Planning Advisor (CEPA) is specially trained to help you maximize the value of your business as you prepare to sell. Some CEPAs are focused on optimizing business operations, but a financial advisor who is also a CEPA can help you figure out an optimal sales price to ensure your personal cash flow and legacy goals are met during retirement. And if you’re charitably inclined, there are advanced strategies you can take as the business owner to give the most to charities of your choice.”
What Does it Take to Earn and Maintain the CEPA?
Those who hope to earn a CEPA designation must fulfill certain requirements set forth by the EPI. Here’s a brief overview of what they are.
CEPA Experience Requirements
To be eligible for the CEPA, candidates must have at least five years of full-time work experience working with business owners directly. They often come from industries such as banking, insurance, accounting, estate planning, and law.
CEPA Education and Affiliation Requirements
CEPA candidates are required to hold at least an undergraduate degree and be a member in good standing with the Exit Planning Institute. In addition, they must complete an intense four-day course taught by exit planning experts.
The course focuses on a variety of topics, such as estate planning, private equity, and Value Acceleration Methodology. It’s held six times a year and offers an interactive, collaborative environment where participants are encouraged to share their experiences and learn from one another.
Here’s an example of what is discussed during each day of the course:
Day 1
- Exit Planning Reinvented
- The Need for Exit Planning
- Value Acceleration Methodology™
- Financial Planning for Business Owners
- Advanced Estate Planning Concepts• Integrating Charitable Intent
Day 2
- Introduction to Value Enhancement
- Exit Planning Deliverables
- Basics of Business Valuation
- Ignition Controls Case Study
Day 3
- Goals and Objectives
- Creating Action Plans
- Delivering Action Plans
- Importance of Teams
- Exit Options Analysis
Day 4
- Understanding Private Equity
- Third-Party Sales and the M&A Process
- ESOPs as an Exit Strategy
- Family Transitions
CEPA Exam
At the end of the four-day course, candidates must take and pass a proctored final exam. The exam is a closed book and takes about three hours to complete.
CEPA Continuing Education Requirements
To maintain their designation, CEPA holders are required to complete 40 hours of continuing education every three years.
Slide Show: What is a Certified Exit Planning Advisor (CEPA)?
Why the Exit Planning Institute Says Business Owners Shouldn’t Wait
We asked EPI President, Scott Snider, to offer his perspective on the value of hiring a CEPA as a business owner.
Scott Snider
President, Exit Planning Institute
“For business owners thinking about how to rapidly grow value in their company and even integrate some of their personal financial goals into that growth plan, hiring a financial advisor who is trained with in the Value Acceleration Methodology, a CEPA, is critical.
Certified Exit Planning Advisors bring a different perspective. They bring a holistic mindset. To have not just a successful company, and a successful exit where you harvest that value, you need to have a significant one.
I think many of us as owners have successful companies, but when we go to grow or go to sell, we fall short on significance.
A CEPA Financial Advisor allows us to see the full picture and build a strategy and plan to achieve all goals in the business, personal and personal financial aspects of our company and life. This allows us not only to have a successful company and exit but have a significant one.”
FAQs
How can I confirm the financial professional I’m working with holds the Certified Exit Planning Advisor designation?
You can confirm the status of a CEPA designation holder in the member directory on the EPI website.
What if I have a complaint about the Certified Exit Planning Advisor I’m working with?
If you have a complaint about a CEPA, submit your matter in writing to EPI President Scott Snider at the following address:
14701 Detroit Avenue, Suite 430
Lakewood, OH 44017
I’m a Certified Exit Planning Advisor interested in joining Wealthtender. How should I get started?
Thanks for your interest in joining Wealthtender. We’re excited to help CEPAs connect with business owners interested in the specialized experience and services you offer to help them optimize the value and efficiency of their business.
As a member of the Exit Planning Institute, you’re eligible to choose any subscription plan and enjoy a lifetime discount when you join Wealthtender.
Learn how in this article published by the Exit Planning Institute: How CEPAs Can Utilize Wealthtender
Where can I learn more about other professional designations held by financial advisors and coaches?
Refer to this list of popular financial certifications prepared by Wealthtender to help you learn more about each designation. You’ll find a brief description of each certification, plus links to in-depth articles if you want to learn more about a particular designation.
About the Author
About the Author
Brian Thorp
Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian
Discover financial advisors trusted by residents of Brainerd, Minnesota in the only local directory featuring 5-Star Certified Advisor Review™ recipients and Wealthtender Voice of the Client Award™ winners—recognition earned for exceptional client feedback. Compare fiduciary, fee-only advisors, CFP® professionals, and specialists to find the right fit for your unique financial needs.
Whether you have lived in Brainerd for years or recently moved to town, you may need help finding the right financial advisor in the community best suited for your individual needs.
It’s important to first consider your own financial planning priorities before choosing an advisor. Here are a few quick tips to help you get started along with financial advisors in Brainerd featured on Wealthtender you may want to add to your shortlist.
Featured Brainerd Financial Advisors
As you prepare to interview financial advisors in Brainerd who may be right for you, get to know local financial advisors featured on Wealthtender.
📍 Map: Financial Advisors with their Primary Office Location in Brainerd
Double-click (or pinch the map on mobile devices) to zoom in and expand the details for financial advisors whose primary office location is in Brainerd.
📍Double-click or pinch pins to view more.
The Benefits of Hiring a Financial Advisor in Brainerd
Hiring a financial advisor can be a great move to help you build a long-term investing strategy. Advisors can help you build an investment portfolio to meet your financial goals and help you plan appropriately for retirement.
As a resident living in Brainerd, hiring a financial advisor who lives nearby and understands the local economy, cost of living, and regional employers can be quite valuable, especially if your individual circumstances are deeply tied to such factors.
Do you work for one of the largest employers in Brainerd? If so, there’s a good chance the local financial advisor you hire will also have other clients who work there. This knowledge could prove valuable if they are already familiar with your employee benefits, such as a 401(k) plan, Health Savings Accounts, and other components of your total compensation package.
When you reach out to financial advisors you’re considering hiring, let them know where you work and ask if they are familiar with your employer’s unique benefits and compensation structure.
Quick Tips For Hiring an Brainerd Financial Advisor
Before hiring a financial advisor in Brainerd, here are a few quick tips to help you find the best advisor for you.
1. Decide Which Services You Need
Before hiring an advisor, determine what services you need from them. Whether it’s full-service investment management or a plan focused on a specific area of your finances, put together a list of what you’d like help with before contacting an advisor.
Though most people use a financial planner simply to invest for retirement, this is only a small part of what many advisors offer. Here’s a quick rundown of potential services a financial advisor may offer you:
- Budgeting and money management
- Debt management
- Insurance planning
- Retirement planning
- Other investment planning
- Inheritance planning
- Estate planning
- Tax planning
As you can see, financial advisors can help you with your entire financial picture, not just investing. As you start to plan for life’s bigger milestones, you should consider finding a financial advisor that specializes in those areas.
Finding the right advisor can help you minimize risk, maximize gains and take advantage of tax breaks while investing for your future. They can also help you protect your assets with the right kinds of insurance and help you pass on your financial legacy with a proper estate plan.
2. Consider Your Budget and Payment Preferences
Once you have a list of services you would like, review the fee structures financial advisors offer. Finding a balance between the services you need and the cost of those services will help narrow down the field of advisors you may want to work with.
If you are looking for a full-service advisor to manage all of your investments, consider searching among fee-based financial advisors. If you want to manage your money yourself, consider the flat fee and monthly subscription advisors for ongoing support.
3. Interview Multiple Financial Advisors
Once you have chosen the services and fee structure you prefer, it’s time to contact a few advisors and interview them. Here are questions to ask financial advisors:
- What services do you provide?
- What are all the ways you get paid? (fee transparency)
- What is your investment strategy?
- How do you measure investment performance?
- How do we communicate about my plan?
Interview multiple advisors to get a feel for who you want to work with. A combination of fees, services, and customer service will help you determine the best fit for your financial advice.
4. Review Financial Advisor Credentials
Once you find an advisor (or two) you feel comfortable with, it’s always a good practice to check their credentials and the firm’s details. You can do this at the Investment Adviser Public Disclosure (IAPD) website.
You can check both the individual and the firm to view their background and experience details, as well as any disciplinary action taken against them or their firm.
As licensed financial professionals, there is oversight into how financial advisors conduct business, so running a quick (free) check on them is recommended.
For additional information about advisor credentials, read our article to learn the most popular designations held by financial advisors, as well as specialized credentials which may be important to consider if you have unique financial planning needs.
Frequently Asked Questions & Additional Resources
How do I know if I’m ready to hire a financial advisor?
You should strongly consider hiring a financial advisor if you have a significant amount of money available for saving or investing. This could occur after years of making annual contributions to a retirement plan like a 401(k) through your employer or suddenly if you receive a large inheritance or sell your house for a large profit.
But even if you don’t have a lot of money saved, many financial advisors and planners provide reasonable pricing options and valuable services you should consider, especially if you’re facing a significant life event. For example, if you’re starting a new job, getting married, starting a family, getting divorced, lost your job, starting or selling a business, or approaching retirement age, working with a trusted financial advisor or planner may prove worthwhile.
Before I hire a new financial advisor, should I fire my current advisor?
You don’t need to fire your current advisor before beginning your search for a new financial advisor. In fact, your new advisor can help coordinate the transition of your assets from your previous financial advisor.
Where can I read reviews about financial advisors written by their clients to help me decide if I should hire them?
After 60 years of regulatory prohibition of financial advisor reviews in the US, a rule issued by the Securities and Exchange Commission (SEC) became effective on May 4, 2021 that means both financial advisors and directory websites that help consumers search for a financial advisor can collect and display financial advisor reviews, an important factor worth considering when choosing who you’ll hire to manage your investments and life savings.
Wealthtender is the first independent advisor review platform designed to be fully compliant with the new SEC rule, and we look forward to helping you evaluate financial advisors based on reviews written by their clients.
I’m a local financial advisor interested in being featured in this guide. How do I get started?
Thanks for your interest. We look forward to learning more about your practice and helping you attract your ideal clients where you may be a good fit based on their individual needs and circumstances. Please click here to learn how you can join local financial advisors featured on Wealthtender.
How Much Does a Financial Advisor Cost?
➡️ How Much Does a Financial Advisor Cost? Read the Article
About the Author
About the Author
Brian Thorp
Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian
Discover financial advisors trusted by residents of La Quinta, California in the only local directory featuring 5-Star Certified Advisor Review™ recipients and Wealthtender Voice of the Client Award™ winners—recognition earned for exceptional client feedback. Compare fiduciary, fee-only advisors, CFP® professionals, and specialists to find the right fit for your unique financial needs.
Whether you have lived in La Quinta for years or recently moved to town, you may need help finding the right financial advisor in the community best suited for your individual needs.
It’s important to first consider your own financial planning priorities before choosing an advisor. Here are a few quick tips to help you get started along with financial advisors in La Quinta featured on Wealthtender you may want to add to your shortlist.
Featured La Quinta Financial Advisors
As you prepare to interview financial advisors in La Quinta who may be right for you, get to know local financial advisors featured on Wealthtender.
📍 Map: Financial Advisors with their Primary Office Location in La Quinta
Double-click (or pinch the map on mobile devices) to zoom in and expand the details for financial advisors whose primary office location is in La Quinta.
📍Double-click or pinch pins to view more.
The Benefits of Hiring a Financial Advisor in La Quinta
Hiring a financial advisor can be a great move to help you build a long-term investing strategy. Advisors can help you build an investment portfolio to meet your financial goals and help you plan appropriately for retirement.
As a resident living in La Quinta, hiring a financial advisor who lives nearby and understands the local economy, cost of living, and regional employers can be quite valuable, especially if your individual circumstances are deeply tied to such factors.
Do you work for one of the largest employers in La Quinta? If so, there’s a good chance the local financial advisor you hire will also have other clients who work there. This knowledge could prove valuable if they are already familiar with your employee benefits, such as a 401(k) plan, Health Savings Accounts, and other components of your total compensation package.
When you reach out to financial advisors you’re considering hiring, let them know where you work and ask if they are familiar with your employer’s unique benefits and compensation structure.
Quick Tips For Hiring an La Quinta Financial Advisor
Before hiring a financial advisor in La Quinta, here are a few quick tips to help you find the best advisor for you.
1. Decide Which Services You Need
Before hiring an advisor, determine what services you need from them. Whether it’s full-service investment management or a plan focused on a specific area of your finances, put together a list of what you’d like help with before contacting an advisor.
Though most people use a financial planner simply to invest for retirement, this is only a small part of what many advisors offer. Here’s a quick rundown of potential services a financial advisor may offer you:
- Budgeting and money management
- Debt management
- Insurance planning
- Retirement planning
- Other investment planning
- Inheritance planning
- Estate planning
- Tax planning
As you can see, financial advisors can help you with your entire financial picture, not just investing. As you start to plan for life’s bigger milestones, you should consider finding a financial advisor that specializes in those areas.
Finding the right advisor can help you minimize risk, maximize gains and take advantage of tax breaks while investing for your future. They can also help you protect your assets with the right kinds of insurance and help you pass on your financial legacy with a proper estate plan.
2. Consider Your Budget and Payment Preferences
Once you have a list of services you would like, review the fee structures financial advisors offer. Finding a balance between the services you need and the cost of those services will help narrow down the field of advisors you may want to work with.
If you are looking for a full-service advisor to manage all of your investments, consider searching among fee-based financial advisors. If you want to manage your money yourself, consider the flat fee and monthly subscription advisors for ongoing support.
3. Interview Multiple Financial Advisors
Once you have chosen the services and fee structure you prefer, it’s time to contact a few advisors and interview them. Here are questions to ask financial advisors:
- What services do you provide?
- What are all the ways you get paid? (fee transparency)
- What is your investment strategy?
- How do you measure investment performance?
- How do we communicate about my plan?
Interview multiple advisors to get a feel for who you want to work with. A combination of fees, services, and customer service will help you determine the best fit for your financial advice.
4. Review Financial Advisor Credentials
Once you find an advisor (or two) you feel comfortable with, it’s always a good practice to check their credentials and the firm’s details. You can do this at the Investment Adviser Public Disclosure (IAPD) website.
You can check both the individual and the firm to view their background and experience details, as well as any disciplinary action taken against them or their firm.
As licensed financial professionals, there is oversight into how financial advisors conduct business, so running a quick (free) check on them is recommended.
For additional information about advisor credentials, read our article to learn the most popular designations held by financial advisors, as well as specialized credentials which may be important to consider if you have unique financial planning needs.
Frequently Asked Questions & Additional Resources
How do I know if I’m ready to hire a financial advisor?
You should strongly consider hiring a financial advisor if you have a significant amount of money available for saving or investing. This could occur after years of making annual contributions to a retirement plan like a 401(k) through your employer or suddenly if you receive a large inheritance or sell your house for a large profit.
But even if you don’t have a lot of money saved, many financial advisors and planners provide reasonable pricing options and valuable services you should consider, especially if you’re facing a significant life event. For example, if you’re starting a new job, getting married, starting a family, getting divorced, lost your job, starting or selling a business, or approaching retirement age, working with a trusted financial advisor or planner may prove worthwhile.
Before I hire a new financial advisor, should I fire my current advisor?
You don’t need to fire your current advisor before beginning your search for a new financial advisor. In fact, your new advisor can help coordinate the transition of your assets from your previous financial advisor.
Where can I read reviews about financial advisors written by their clients to help me decide if I should hire them?
After 60 years of regulatory prohibition of financial advisor reviews in the US, a rule issued by the Securities and Exchange Commission (SEC) became effective on May 4, 2021 that means both financial advisors and directory websites that help consumers search for a financial advisor can collect and display financial advisor reviews, an important factor worth considering when choosing who you’ll hire to manage your investments and life savings.
Wealthtender is the first independent advisor review platform designed to be fully compliant with the new SEC rule, and we look forward to helping you evaluate financial advisors based on reviews written by their clients.
I’m a local financial advisor interested in being featured in this guide. How do I get started?
Thanks for your interest. We look forward to learning more about your practice and helping you attract your ideal clients where you may be a good fit based on their individual needs and circumstances. Please click here to learn how you can join local financial advisors featured on Wealthtender.
How Much Does a Financial Advisor Cost?
➡️ How Much Does a Financial Advisor Cost? Read the Article
About the Author
About the Author
Brian Thorp
Brian is CEO and founder of Wealthtender and Editor-in-Chief. He and his wife live in Austin, Texas. With over 25 years in the financial services industry, Brian is applying his experience and passion at Wealthtender to help more people enjoy life with less money stress. Learn More about Brian
Do you work at Lockheed Martin?
Get expert insights from financial advisors who specialize in helping Lockheed Martin employees and executives make the most of their compensation package and benefits.
Looking for a financial advisor who specializes in working with Lockheed Martin employees? You’re in the right place. Below, you’ll find an advisor who understands Lockheed Martin benefits and compensation — along with his answers to common financial questions from Lockheed Martin employees and executives.
Whether you’re a new Lockheed Martin employee or you’ve advanced into a management or executive leadership role over a multi-year career, making smart decisions about your income and Lockheed Martin benefits can have a lasting impact on your financial future. For example:
✅ Do you know the right moves to get the greatest value from the Lockheed Martin benefits available to you?
✅ If you’re thinking about leaving Lockheed Martin for another job or planning to retire in a few years, are you taking the right steps today to receive all the compensation and benefits you’ve earned?
Please note, neither this article nor the advisor(s) featured are endorsed, affiliated or sponsored by Lockheed Martin in any way.
Key Takeaways
Overconcentration in Company Stock Is the Single Most Common Mistake
Joshua Brooks names overconcentration as the #1 mistake he sees, with emotional investing running a close second: employees know the company’s products and assume that knowledge translates into a sound position, without comparing it against their whole portfolio or risk tolerance. He points to net unrealized appreciation as a planning concept most Lockheed Martin employees have never heard of.
For Cleared Employees, a Disciplined Financial Plan Protects the Career Itself
Financial considerations are one of the adjudicative guidelines the government uses when granting and reviewing security clearances. That makes financial discipline a career issue for cleared Lockheed Martin professionals, not just a retirement one — and it sits alongside a second concentration problem, since paycheck, company stock, and industry health all trace back to the federal budget.
Military Retirees Joining Lockheed Martin Should Not Move the TSP First
Nothing forces a TSP decision on day one, and Joshua Brooks argues the rollover should be the last decision rather than the first. Capture the employer contribution, position your taxes now that salary stacks on top of retired pay, then give each account a mission — and only then decide where the money lives.
Why Lockheed Martin Employees Work with a Specialist Financial Advisor
Throughout the year, Lockheed Martin provides its employees and executives with updates about their benefits, ranging from health insurance and health savings accounts to retirement plans like a 401(k), a deferred compensation plan for executives, and equity awards such as restricted stock. Longtime employees may also have a frozen company pension earned under the old plan. While the company offers many useful resources and access to knowledgeable staff who can assist with questions, you’ll also find financial professionals not affiliated with Lockheed Martin who specialize in helping Lockheed Martin employees make the most of their income and benefits.
Whether you work at the Bethesda, Maryland headquarters, the Aeronautics operations in Fort Worth, Texas, the Marietta, Georgia plant, Skunk Works in Palmdale, California, Missiles and Fire Control in Orlando, Florida, a Space site in Colorado, another office location around the country, or remotely from home, you may have questions about your compensation package and benefits better suited for a financial professional who can offer unbiased advice and guidance.
Sensitive topics — like the steps you should take before quitting your job at Lockheed Martin to work elsewhere, protecting yourself in advance of a corporate layoff, or deciding when you should plan to retire — are all conversations that may be more comfortable with a trusted financial advisor.
Should You Hire a Lockheed Martin Specialist or a Local Financial Advisor?
You’ll likely find dozens of nearby financial advisors well-suited to help you reach your money goals with a personalized plan. But it can be harder to find a financial advisor who specializes in serving Lockheed Martin employees. Fortunately, many financial advisors offer virtual services, so you can meet online no matter where you (or they) live — which means you can hire a specialist financial advisor who lives hundreds of miles away if their knowledge and experience working with Lockheed Martin employees is the better fit for your unique needs.
💡 In the Q&A below, you’ll gain insights from a financial advisor who works with Lockheed Martin employees to help them make smart decisions, get the most value from their compensation and benefits, reduce their money stress, and prepare for a comfortable retirement.
🙋♀️ Have a question not yet answered? Use the form below to submit it anonymously and watch this article for updates with answers to your questions. You can also reach out to the financial advisor below to set up an introductory call or contact him with your questions by email.
Q&A: Financial Planning Tips for Lockheed Martin Employees & Executives
In this section, you’ll learn how you can make the most of your Lockheed Martin employee benefits and gain valuable tips from a financial advisor who specializes in working with Lockheed Martin employees and executives.
Financial Advisor Q&A · Lockheed Martin Employees & Executives
Joshua Brooks, CFP®
Exponential Advisors · Weatherford, TX · Serves clients nationwide
Financial planning for military retirees and cleared professionals in the defense industryJoshua Brooks is a financial advisor and Army Reserve chaplain based in Weatherford, Texas, serving clients nationwide. He works with military retirees, transitioning senior leaders, and cleared professionals entering the defense industry — helping them coordinate military retired pay, the TSP, and Lockheed Martin benefits into a single plan.
QWhen you first speak with a Lockheed Martin employee, what questions do you like to ask to better understand their unique circumstances and determine how you can best help them achieve their goals?
I try to talk as little as possible in a first conversation. A doctor asks before diagnosing. Same principle.
The questions I ask a military retiree: What is your biggest financial challenge right now? Where do you hope to be in three to five years? What do you do for fun?
Then the military ledger. Is your TSP all pretax, or did you contribute to the Roth side? What does your retired pay look like? What is your VA disability rating? I know that is personal, but it drives real planning decisions. What did you elect on SBP, and who depends on it? What is your clearance status?
Then the household. Does your spouse work? What does the family picture look like? How do you feel about paying for the kids’ college? What estate planning have you actually completed, not just researched?
And finally: how do you feel about your financial plan? Not the spreadsheet. The feeling.
Here is why I ask. Coordination is the most valuable part of a financial plan. Competence is the most important part of executing it. Empathy and understanding are the most important parts of the relationship between a client and an advisor. The answers tell me whether the pieces of your financial life were coordinated on purpose or are just individually reasonable. Those are different things, and the difference is where the damage hides.
QIs there a particular benefit available to Lockheed Martin employees you feel isn’t as well utilized or understood by employees as it should be?
I don’t think any benefit at Lockheed Martin is underutilized compared with the others.
However, I think it’s important to reframe the conversation around the quality of the company’s benefit stack. Smaller companies, generally, don’t possess the resources to offer a comprehensive set of benefits the way that larger firms can.
Therefore, the fact that employees are automatically enrolled at hire and matching contributions automatically and immediately vest shows Lockheed Martin’s commitment to providing a quality employee experience.
These things are helpful to understand because they aren’t required of the company; you could call them enhanced benefits or an incentive to work at and remain at the company. The company match is a layup that most people understand. In certain circumstances, people don’t contribute because they’re prioritizing other objectives.
Retiring from Lockheed Martin?
Get Before Your Last Day, a free printable Decision Map for sequencing your pension, 401(k), insurance, HSA, Social Security, and taxes.
QFor Lockheed Martin employees thinking about leaving the company to accept a job elsewhere, what actions do you recommend they take before resigning and shortly thereafter?
Review their employment contract and benefits. The grass isn’t always greener on the other side. Many people are quick to take the first or second job offer because it provides comfort and security, then they get locked into that organizational culture.
In real estate, it’s location, location, location. At work, it’s culture, culture, culture. Culture wins hands down. Now you still have to earn a decent paycheck, but if you’re fighting with your boss or coworkers, how helpful is that? Salary matters, but so do PTO, attitudes, values, the overall benefits package, location, and executive leadership.
I also recommend consulting with Human Resources if a manager or supervisor doesn’t align with how you want to be treated or exhibits counterproductive leadership tendencies.
QFor Lockheed Martin employees who have managed their finances on their own to this point, what would you suggest they consider to help them decide if they should begin working with a financial advisor at this stage in their lives?
Some people should keep managing their own money. I have told prospective clients exactly that.
Picture a senior officer, a composite of people I have met, not a client. Spreadsheet pro. Rental properties handled. Estate documents signed. Steady temperament. Stable home life. He does not need me, and I would say so to his face. Managing your own money for twenty years with solid results means you did something right. You read the right books. Bogleheads, The Intelligent Investor, A Random Walk Down Wall Street. No shade. You are a rare breed.
So when does managing it alone stop being enough?
When you are not diversified. A good ten-year run is not a strategy. There is no free lunch, and very few professionals outperform the market over long periods, let alone the rest of us.
When you are constantly trading. Investor behavior, not investment selection, is where most self-managed plans bleed.
When investments are the only thing you manage. Investment management is one horse in the show. Insurance, tax, retirement income, and estate planning are the others, and coordination among them is where a plan earns its keep.
And when someone else would inherit the plan. If your spouse would be handed a spreadsheet and a filing cabinet, that is not a plan. That is homework for a grieving person.
Not everyone needs an advisor. Many people need an advisor. Which one are you?
QWhat questions do you recommend Lockheed Martin employees ask financial advisors they’re considering hiring to help them decide if they’re a good fit?
Ask these questions of any advisor you are considering. Then watch how they answer. Some will be calm and explain. Some will hem and haw around the bush. That tells you plenty.
How do you get paid, and by whom? I am a fee-only financial planner. My clients pay me directly, and no one else does. Fee-only does not eliminate every conflict of interest, but it removes the most common ones, and I disclose the rest in writing in my Form ADV.
Are you a fiduciary at all times, in writing? I am.
Where is my money held? Your assets should sit at a third-party custodian, in your own name. Mine custody at Altruist. An advisor who resists this question is telling you something.
What credentials do you hold? I earned the CFP® certification in 2020. Ask what the letters after any advisor’s name actually require.
Who is your typical client? Mine are military retirees and transitioning senior leaders. Some want a full plan with investment management. Some want planning only. If an advisor cannot describe a typical client, you may be about to become whatever walks in the door.
And read the Form ADV before you sign anything. It is free, public, and where the honest answers live.
QGiven that many Lockheed Martin roles require active security clearances and are tied to long-term government contracts, how does that unique career and employment stability profile shape the financial planning conversations you have with Lockheed Martin clients?
The stability is real, but it is concentrated.
Lockheed Martin is an extraordinary company, and defense work provides steady income and strong benefits. But your paycheck, any company stock you hold, and the health of your whole industry ride on one customer: the federal budget. Budget fights, continuing resolutions, and contract cycles are facts of life in this industry. You already know this better than most.
So two things shape the conversation.
First, structure. Hold enough cash to ride out a contract cycle without touching long-term money. And do not let company stock pile up unmonitored on top of a company paycheck. That is not diversification. That is keeping your eggs, your basket, and your grocery store in the same building.
Second, the clearance itself. Financial considerations are one of the adjudicative guidelines the government uses when it grants and reviews security clearances. For a cleared professional, a disciplined financial plan is not just about retirement. It protects the career that funds the retirement.
I have spent 22 years in the Army, first in the Infantry and now as a chaplain, with combat deployments in between. I serve military retirees, transitioning senior leaders, and professionals entering the defense industry. I tell them all the same thing: stability you haven’t stress-tested isn’t stability. It is an assumption.
QHow do you advise Lockheed Martin employees on evaluating and maximizing their equity compensation, including performance stock units and other long-term incentive awards, while managing concentration risk and the tax implications of vesting events?
The #1 mistake, hands down, is overconcentration. The #2 mistake is associated with #1: emotional investing. They feel like they know the company, its products, services, and widgets, but they’re not comparing the business to the total universe of investable assets, their portfolio composition, or their risk tolerance. Emotions are helpful tools and very powerful, but they can interfere with sound investing outcomes.
I want my clients to understand that risk tolerance is not necessarily about the maximum amount of risk you’re willing to take, but the amount that helps you sleep well at night. Naturally, people become more conservative if they’re relying on their retirement nest egg and, say, Social Security benefits. If you start planning ahead of time, this becomes a non-issue because you’ve saved enough or have enough income sources to feel comfortable. That’s not the case for everybody.
I would tell them that we need to take a closer look. For example, many people haven’t heard of Net Unrealized Appreciation. This is an advanced financial planning concept. Once you explain it, the lightbulb goes on.
Just schedule a brief conversation to talk it over with a professional. If you were doing a major landscaping project, air conditioning repair, or automotive maintenance, it’s not worth it to try to do it on your own.
QFor military retirees joining Lockheed Martin, how should they handle their TSP and military retirement benefits alongside the new Lockheed Martin 401(k)?
BLUF: Evaluate your options as ruthlessly and as strategically as possible, and know that nothing forces a TSP decision on day one. Moving money should be the last decision you make, not the first.
Here is something worth knowing up front. Most advisors get paid when you transfer assets to their custodian. That is not a bad thing. Professional advice can be worth every penny. But it means anyone urging you to move your TSP quickly has an interest you should understand. Just like you would purchase a luxury sports car, a high-end appliance, or a riding lawn mower, you do your research. Read the reviews. Ask trusted friends. The same standard applies to this decision: who can you trust?
The real problem is bigger than the rollover question. You just left one retirement system and joined another, and the two were never designed to talk to each other. Your pension, your TSP, and your new Lockheed Martin 401(k) each make sense on their own. Uncoordinated, they drift.
Four steps, in order of march.
First, capture the employer money. Contribute at least enough to receive the full company contribution in the new plan. Check your plan documents for the current match structure.
Second, position your taxes. Your salary now stacks on top of a pension, and that combination usually puts you in a different bracket than you had in uniform. That changes the Roth-versus-pretax math. This is tax positioning, and it deserves a deliberate decision, not a default box-check.
Third, give each account a mission. The TSP is a solid vehicle, but you still have to drive it. It is low cost, it is simple, and the G Fund exists nowhere else. The new 401(k) is where your ongoing contributions and employer money land. Decide what each account is for before deciding where each account lives.
Fourth, and only now, the location decision. Leaving the TSP alone, consolidating into the 401(k), or rolling to an IRA each carries tradeoffs: costs, investment options, creditor protection, withdrawal rules, and what you give up when you leave. Consolidation is a choice, not a default.
Keep in mind: every employer plan has its own rules and procedures. Plan provisions vary by employee group and plan year, and TSP and tax rules change. Verify against current plan documents before acting. Every situation is different.
I am an Army Reserve chaplain, CFP® professional, husband, and father of four boys. As a fiduciary, I am required to act in your best interest, and I built my firm to do so.
Considering a financial advisor who specializes in working with Lockheed Martin Employees & Executives?
This material is for general educational purposes and is not individualized investment, tax, legal, or benefits advice. Lockheed Martin plan provisions vary by employee group, hire date, and plan year; TSP, tax, and VA rules change. Review current plan documents and official sources and consult qualified professionals about your circumstances. Exponential Advisors LLC is a Texas-registered investment adviser. Exponential Advisors LLC is not affiliated with or endorsed by Lockheed Martin or Wealthtender.
Quick Facts & Resources for Lockheed Martin Employees
| Lockheed Martin Quick Facts & Resources | Details / Useful Links |
|---|---|
| Lockheed Martin Corporate Headquarters Address | 6801 Rockledge Dr, Bethesda, MD 20817 (📍 Google Maps) |
| Overview of Lockheed Martin Benefits | Visit LockheedMartinJobs.com/Working-Here |
| How much do Lockheed Martin employees make? | View Lockheed Martin Salary Research on Glassdoor |
| Where can I learn more about careers at Lockheed Martin? | Visit LockheedMartinJobs.com |
| How many people work for Lockheed Martin? | Lockheed Martin has approximately 121,000 employees in the United States and internationally (Source: Lockheed Martin) |
| What is the ticker symbol for Lockheed Martin stock? | The Lockheed Martin ticker symbol is LMT. |
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About the Author
Brian Thorp
Founder & CEO, Wealthtender · Editor-in-Chief
Brian Thorp is the founder and CEO of Wealthtender and serves as Editor-in-Chief. With over 25 years in the financial services industry — including nearly 22 years at Invesco, where he led strategic partnerships with wealth management firms representing more than $100 billion in assets — Brian founded Wealthtender to help people find financial advisors they can trust and make more informed money decisions.
A member of the National Society of Compliance Professionals and its SEC Marketing Rule Working Group, Brian was recognized by WealthManagement.com as one of its “Ten to Watch in 2024” for his work reshaping how financial advisors market their services. He holds a B.B.A. in Finance from The University of Texas at Austin.
Brian and his wife live in Austin, Texas.
What this article covers
Facet is a virtual financial planning firm that pairs clients with Certified Financial Planners and charges a flat annual fee — making professional financial advice accessible to people who’ve avoided advisors because of cost concerns or minimum asset requirements. But is it the right fit for you? This guide covers how Facet works, who it typically serves, how it compares to robo-advisors, what the experience is like, how much it costs, and the honest pros and cons that should inform your decision. If Facet isn’t the right match, you’ll also find a directory of independent specialist advisors who may be better suited to your specific needs.
You can benefit from financial planning no matter who you are or where you are in life. In fact, it may be just what you need to meet your short-term and long-term financial goals. With a solid financial plan in place, you’ll be able to build an emergency fund, retire early, pay for your child’s college, travel the world, and accomplish anything else that’s important to you.
If you’d like to pursue financial planning but are worried about the cost, it’s a good idea to familiarize yourself with Facet (formerly known as Facet Wealth). With Facet, you can receive many of the services you need at a price you can afford. Let’s take a closer look at what Facet is so you can determine whether it’s a good option for your unique situation.
Key Takeaways
Facet is a virtual financial planning firm that charges a flat annual fee rather than a percentage of assets — making it accessible to people who’ve avoided advisors due to cost.
Unlike traditional wealth managers who charge 1% or more of assets under management, Facet charges a flat annual fee based on the complexity of services you need — not the size of your portfolio. All advisors are Certified Financial Planners (CFPs), fiduciaries legally required to act in your best interest. This model is particularly well-suited to people with good incomes but moderate investable assets who want real financial planning, not just portfolio management.
Facet’s key advantages over robo-advisors are human CFP access, comprehensive financial planning, and fiduciary accountability — but it comes with tradeoffs including no in-person meetings and no choice of advisor.
Robo-advisors automate investment management cheaply but can’t replace human judgment on complex decisions — tax strategy, insurance needs, estate planning, or navigating major life transitions. Facet fills that gap with real CFP-led planning at a fraction of traditional advisor costs. The tradeoffs: meetings are online or by phone only, and after your initial call Facet matches you to an advisor rather than letting you select one yourself. If you need a specialist advisor for your occupation or life situation, an independent specialist may serve you better.
Facet is best for people who want affordable, comprehensive financial planning but don’t need a specialist — if you have complex needs around a specific occupation, business ownership, or life situation, an independent specialist advisor is likely a better fit.
Facet advisors provide broad financial planning competence but most don’t specialize in particular client types — business owners, physicians, tech employees with equity compensation, or divorcing individuals, for example. If your financial situation has distinctive complexity tied to your occupation, employer, or life stage, working with an independent specialist advisor who focuses exclusively on clients like you will typically produce better outcomes than a generalist, regardless of cost.
What Is Facet? How the Flat-Fee Financial Planning Firm Works
Facet is a financial planning firm that offers its services through financial advisors online and by phone at a lower cost than many traditional wealth management firms. Its primary focus is on financial health and wellness.
Additionally, Facet’s two main principles include transparency and simplicity. Headquartered in Baltimore, Maryland, and founded in 2016, the company strives to make it as easy as possible to work with them.
Facet believes the amount you pay for financial planning should be based on the services you receive, not the monetary value of your assets. Unlike many financial planning firms, the company will manage your investments and provide you with advice for a flat annual fee. You’ll be able to budget for your services in advance because you won’t be charged based on product commissions or a percentage of your investments.
The company employs a number of Certified Financial Planners (CFPs) who will help you meet your financial goals. Following an initial phone call, they’ll pair you with the ideal CFP for your specific situation. You can depend on them to address any questions or concerns at any time.
Who Is Facet Best For?
While Facet Financial Advisors can serve a variety of individuals, they typically help those who desire professional, customized financial advice at a predictable, affordable price point. Their typical client is someone who may have steered away from financial planning services in the past because they didn’t believe the benefits were worth paying a percentage of their assets.
People choosing to work with Facet advisors may also prefer a fiduciary who acts in their clients’ best interests rather than earning commissions on investment products. Lastly, many Facet clients seek more than the automated portfolio management they may receive from robo-advisors.
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Facet vs. Robo-Advisors: When a CFP Is Worth the Extra Cost
Robo-advisors offer investment management or financial advice online with minimal human intervention. They use algorithms to provide their services and are widely used by individuals who don’t want to spend a lot of money on a financial planner and like the convenience they bring.
It’s important to note that a robo-advisor can’t replace an experienced financial professional. A financial advisor will get to know you on a personal level and help you create a financial plan that aligns with your goals. Robo-advisors are tools that help you with your finances, rather than financial planners who have years of knowledge and relevant experience.
If you like the affordability and simplicity of robo-advisors but would prefer financial planning services with a human touch, you’d likely find greater value in a Facet advisor. With a Facet financial advisor, you’ll gain the benefits of affordable financial planning that a robo-advisor offers with the individualized, human support it lacks.
What Is the Facet Experience Like?
If you’d like to work with a Facet financial advisor, you’ll need to schedule an initial phone call. The phone call will last about thirty minutes and serve as an opportunity for Facet to get to know you and your particular goals and priorities. Once the company learns more about you, they’ll set you up with a CFP and perform a complimentary review of your finances.
If you decide to become a Facet client, you’ll receive access to an online portal and be asked to enter your financial account credentials. This information will be 100% secure and solely used to make appropriate recommendations for you. Facet will not have access to your money or be able to make changes to any of your accounts.
You can work and meet with your Facet advisor any time you’d like. Keep in mind, however, that your meetings will revolve around the topics you pay for advice on. Most clients meet with their CFP on a regular basis at first and a few times per year afterward once they’ve designed their financial plan.
What Credentials Do Facet Advisors Hold — and Why It Matters
As we mentioned earlier, all Facet advisors are CFPs. CFPs have all completed rigorous education and experience requirements. They hold at least a bachelor’s degree from an accredited college and university.
They also have either 6,000 hours of qualifying experience in the financial planning field or 4,000 hours of experience as an apprentice. In addition to these education requirements, CFPs have passed the CFP Certification Exam, which is made up of 170 multiple-choice questions as well questions with short scenarios and lengthy case histories.
CFP holders are held to the highest of standards outlined by the CFB Board. These standards are based on vital principles such as objectivity, competence, fairness, professionalism, and confidentiality.
They’re also fiduciaries, meaning they make their clients’ best interests a priority. Since they are legally obligated to put client interests above their own, they won’t make recommendations based on commissions. Their suggestions will be ideal for your unique financial situation and goals.
Should You Hire a Facet Advisor? Pros and Cons
Before you take the plunge and hire a Facet advisor, consider the pros and cons of doing so.
Advantages of Hiring a Facet Advisor
- Cost Effective: Perhaps the greatest advantage of a Facet advisor is their affordability. If you’ve shied away from financial planning services in the past because of cost, they may be a good option. You’ll pay a Facet advisor a flat, annual fee rather than high commissions or a percentage based on your investments. In addition, there are flexible payment plans as well as no setup or cancellation fees. This is great news if you want to avoid surprise expenses and be able to budget for your services.
- Comprehensive Planning: While some financial planners only focus on managing and growing your investments, Facet advisors offer comprehensive planning. They can help you create a roadmap to meet your financial goals. You can trust them to assist with retirement, college savings, saving for a mortgage, or any other financial goal you may have.
- Intuitive Online Portal: As a Facet client, you’ll receive access to an intuitive online portal. The portal will include a dashboard that will keep track of your accounts in real-time. You can view it as often as you’d like to get a good idea of where you stand financially. In addition, the portal will offer a space to share your documents and schedule appointments. It’s completely confidential and secure.
Drawbacks and Limitations to Consider
- No Choice in Advisor: After your initial phone call, Facet will match you to an advisor. This may be a drawback if you’d like to do your research, evaluate all of the options available to you, and choose a professional on your own.
- Not Specialized: While Facet advisors offer comprehensive planning, most of them lack a specialty focus. So if you’re in search of a financial planner with specific expertise (e.g. working with business owners or educators, for example), you may be better off hiring a specialist advisor, like you’ll often find among XY Planning Network financial advisors.
- Online Only: If you prefer to meet with a financial planner in-person, Facet isn’t the best choice. Its advisors only meet with clients online via videoconferencing or through the phone. You won’t be able to meet them in an office face-to-face.
How Much Does Facet Cost?
Facet offers seven services that cater to clients with various levels of financial need. The services you select will determine the price of your Facet advisor. Its fees range from ,800 per year or $150 per month to $6,000 per year or $500 per month. In most cases, clients pay a price in the middle of that range.
If you’re a young professional or couple who would like to grow your net worth, you’ll pay less than someone who has complex real estate investments or multiple investment accounts with high balances. Rest assured Facet is completely transparent with its pricing so you’ll know exactly how much you’ll pay upfront. There are no hidden fees or surprise charges.
How to Get Started with Facet
It’s easy to get started with Facet. All you have to do is schedule your 30-minute introductory phone call. Complete the online form with your personal information and basic financial goals. You’ll hear back from Facet shortly and receive a confirmed date and time for your call.
Frequently Asked Questions
When was Facet created?
Facet Wealth was founded in 2016. Headquartered in Baltimore, Maryland, Facet serves clients nationwide.
Who founded Facet Wealth?
Facet Wealth was founded in 2016 by Anders Jones, Patrick McKenna, and Brent Weiss.
Is Facet a robo advisor?
Facet is not a robo advisor. Facet offers financial planning services offered by a team of Certified Financial Planners and believes clients should have planners who can offer human insights that create trust and make for a better-informed plan.
Who are the investors behind Facet ?
Facet raised $100 million in January 2022 from lead investor Durable Capital Partners, a venture capital firm focused on private and public early-stage, small-, and mid-cap companies. Additional investors in the latest and prior rounds include Warburg Pincus, Telesoft Partners, and Green Cow Venture Capital.
Previous investor Warburg Pincus, and new investors Telesoft Partners and Green Cow Venture Capital also participated in the Series C round of funding for Facet. Terms of the deal announced Wednesday morning were not disclosed.
Looking for a Facet Alternative? Find an Independent Specialist Advisor
Whether you’re looking to hire a financial advisor who lives nearby or a specialist advisor hundreds of miles away, get to know financial advisors featured on Wealthtender. Below, you’ll find an interactive map showcasing financial advisors across the US. Further below, you’ll find a gallery of advisors with additional search options.
Double-click (or pinch the map on mobile devices) to zoom in and expand the details for financial advisors.
📍Double-click or pinch pins to view more.
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About the Author
Anna Baluch
Anna Baluch is a freelance personal finance writer from Cleveland, Ohio. You can find her work on sites like The Balance, Freedom Debt Relief, LendingTree and RateGenius. Anna has an MBA in marketing from Roosevelt University. Feel free to reach out to her on LinkedIn.