No matter what your fees are, there’s always the worry that you’re either too expensive and giving up work, or too cheap and leaving money on the table.

These four questions can help you determine whether to give yourself a cut — or a raise.

(Bloomberg News)
(Bloomberg News)

How do your fees compare?

“When I was working for someone else — a very old, boutique, blue-blood firm — my boss used $250 an hour as his rate. He was sixty-something, had multiple credentials and extraordinary tax skills,” says Amy Jo Lauber, principal at Lauber Financial Planning in West Seneca, New York. “I figured, OK, I’m younger and have less experience and fewer credentials, and I picked a number out of the air: $150 an hour. It turns out that this is about the going rate for someone with a certified financial planner designation and about 20 years of experience.”

Planners who structure fees based on a percentage of assets under management find that “one percent is kind of standard,” says Christopher McLaren, owner of Conscious Life Planning in Cincinnati. Like many planners, however, McLaren charges less: 75 basis points, or 50 basis points for $1 million and up. “I find that there’s not much difference between the amounts to manage, as long as the relationship issues are the same,” he says.

Justin Waller, owner of Waller Financial Coaching in Chico, California, derived his fee structure from the Planning Center in Moline, Illinois, charging $150 an hour for do-it-yourselfers looking for a second opinion; $125 a month for younger clients who need fundamentals; and a rate determined by net worth and income for full-service clients. “I estimate financial planning fees based on 50 basis points of net worth, excluding closely held businesses, up to $2.5 million, or 1% of income — whichever is higher,” he says.

A common pitfall is to set your rates according to what CPAs or other financial professionals earn. Robert Schmansky, founder of Clear Financial Advisors in Livonia, Michigan, set rates a bit lower than what a CPA would command. “A little bit less than they were charging turned out to be a drastic underpricing for a planner,” he says.

How complex are your services?

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“I recently dropped the price of an annual review to $75 an hour, just to get people to come back in.” says Amy Jo Lauber, principal at Lauber Financial Planning in West Seneca, N.Y.

“A fee needs to reflect value and be something the client can afford,” McLaren says. He targets generations X and Y, and charges $2,500 per year. Area advisers who charge more work primarily with boomers. “Their planning is typically more complicated,” he says.

Do you profit from project work?

“My target price is based on the number of meetings I anticipate having with the client,” Schmansky says. He charges about $1,500 for what he calls a three-quarters plan. “We talk about retirement and taxes,” he says. “I don’t do a lot with estate planning and insurance, though I do touch on them.”

Like Schmansky, Lauber doesn’t always create full plans for her clients. “I do these little pockets of analysis,” she says. These were in such demand that she was compelled to set prices for her most requested services. “I charges a little less than $150 for some of my package deals, and I recently dropped the price of an annual review to $75 an hour, just to get people to come back in,” she says. “They feel guilty because they haven’t done all the stuff they said they’d do.”

Are you the budget option?

Schmansky cautions against being the undercutter. “At the beginning, I thought that if I just went out and charged a little bit less than everyone else did, the phone would ring off the hook and I’d be swamped,” he says. “My initial game plan was to be that low-cost provider.”

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“A little bit less than they were charging turned out to be a drastic underpricing for a planner.” says Robert Schmansky, founder of Clear Financial Advisors in Livonia, Mich.

It backfired. Clients signed up for simple reviews, but would then bring him complex work. He recalls a teacher who wanted to know if he could retire. “But he also wanted to send twin daughters to college, and when his wife came along, it turned out that her thoughts about the meeting were completely different from his,” he recalls. “She wanted someone to justify retirement and a move to California.”

Waller reached a similar conclusion. He has let clients go, he says, because “they were … always wanting more and trying to drive down the amount they were paying.”

Far better, Lauber says, to charge fair rates and find clients willing to pay them. “I ran a sale of almost half price on all my financial planning for a month,” she says. “There was one woman who just kept stringing me along. Finally, she responded to the sale, and when I said, ‘It will still be this much,’” the woman said, “That’s too much. Take me off your list.’”

“Good riddance,” Lauber says. “She was making me crazy anyway.”