Fee-only planning questionnaire for new online directory released - MoneySense

Fee-only planning questionnaire for new online directory released

Our perception is that the term “fee-only” is often used by financial professionals who are primarily asset-based. Our forthcoming list aims to make the distinction for our DIY readers.


As noted in this space a few weeks ago, MoneySense is revamping its popular online directory of  fee-only planners. Those already in the directory are being emailed a new questionnaire this week, which needs to be filled out and returned to us by Aug. 16 for inclusion in the new list.

So, why are we doing this and what has this got to do with Financial Independence? As noted earlier this week in the The longevity paradox, too many Canadians still do not have a proper financial plan in place. With rising lifespans and ever-improving medical progress, it’s not inconceivable that the average retirement nest egg may have to last 30 years or more. Proper planning of finances is more crucial than ever.

Many MoneySense readers have full-service advisers and are probably well served by them, whether through mutual funds, investment counsellors or full-service brokerages. On the other hand, a significant portion of our readership is self-directed, cost-conscious and seeking tax efficiency. We cater to this audience with our regular ETF coverage, including Dan Bortolotti’s Index Investing column, Evelyn Jacks’ tax column and new features like The ETF All-Stars andCanada’s Best Discount Brokerages. This thrust is also evident in the about-to-be issued third edition of The MoneySense Guide to the Perfect Portfolio, written almost entirely by Dan.

That guide is in essence an introduction to discount brokerages and creating a customized low-cost, passively managed ETF portfolio. But as I note in my own book, Findependence Day, just because self-directed investors can buy their own index funds or ETFs at a discount brokerage doesn’t mean they don’t need or value good financial advice or a la carte financial planning. Even Dan, an expert in the field of self-directed investing if there ever was one, has recognized this, which is why he has begun providing a fee-only service for otherwise self-directed indexers who feel they need a little help getting going.

Industry doesn’t embrace self-directed indexers

As Dan notes in the guide, the Canadian financial services industry is not overly friendly to index investors. His exact words is that the industry “is not a Potato-friendly zone,” the reference being to the Couch Potato portfolio that is also the name of his popular blog. He says “investors who adopt a Couch Potato strategy often feel they have to go it alone.”

Here’s where the revamped directory comes in. Dan’s guide does contain a link to a short list of financial planners he feels are “index friendly.” MoneySense‘s own online directory has been out there for some years but it’s really a mix of financial planners and advisers, some of whom are primarily asset-based (charging a fee that is a set annual percentage of client assets under management); some who are truly fee-only; and some who do both but are primarily asset-based (aka fee-based) with a fee-only adjunct service for clients who insist on it.

We are not saying one model is superior to the other. For that matter, I happen to believe the old-fashioned commission-based model can be well suited to investors who take a buy-and-hold approach. Many and perhaps most investors are probably well-served by fee-based advisers: if they don’t wish to take the time and energy to become full-time self-directed investors, they’re better off focusing on whatever it is they do to earn their daily bread and leave their portfolios to the professionals.

That said, it’s clear that the segment of our readership that believes they can do a lot of their own investing and wish to reduce their investment costs accordingly may still want to find a money coach or fee-only financial planner who can help them create a strong portfolio in the first place, and monitor and rebalance it going forward. They may or may not also need additional help in tax and accounting, estate planning, legal, insurance etc., all services they can contract for (often) also on a “fee-only” basis.

Our perception is that the term “fee-only” is often used by financial professionals who are primarily asset-based. Our prize-winning writer, Preet Banerjee, will be tackling this topic in the November 2013 issue of the magazine. In parallel, we’re sending out a questionnaire to those already in the directory.

To be considered for our directory, email us at  letters@moneysense.ca.